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Solari Report the BY CATHERINE AUSTIN FITTS 1ST QUARTER WRAP UP VOLUME 2016 NUMBER TWO WHERETO STASH CASHIN 2016 2 The Solari Report 1st Quarter 2016 Wrap Up Where to Stash Cash in 2016 by Catherine Austin Fitts Copyright 2016 by Solari Inc. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means electronic or mechanical including photocopying recording or by any information storage and retrieval system without the permission in writing from the publisher. Published April 2016 by Solari Inc. P. O. Box 157 Hickory Valley TN 38042 USA Visit our website Designed by Ben Lizardi Lizardi Communications Inc. Printed in the United States of America SBN-100-9854251-6-4 ISBN-13978-0-9854251-6-6 Disclaimer Nothing on the Solari Report should be taken as individual investment advice. Anyone seeking investment advice for his or her personal financial situation is advised to seek out a qualified advisor or advisors and provide as much information as possible to the advisor in order that such advisor can take into account all relevant circumstances objectives and risks before rendering an opinion as to the appropriate investment strategy. 3 Table of Contents INTRODUCTION................................................................................................................. 4 I. OPTIONS FOR STASHING CASH................................................................................ 6 1. Why Focus on Cash.........................................................................................7 2. Why are You Holding Cash...........................................................................12 3. Who is Your Custodian..................................................................................14 4. Look for Excellence.........................................................................................18 5. Cash Management Options.............................................................................20 6. What If..........................................................................................................30 7. Yields...............................................................................................................32 8. Please Remember............................................................................................35 II. NEWS STORIES TRENDS...................................................................................... 36 PART I ECONOMY FINANCIAL MARKETS...........................................37 1. Global 3.0.......................................................................................................37 2. Surveillance Capitalism.....................................................................................38 3. Financial Hot Potatoes....................................................................................38 PART II GEOPOLITICS...................................................................................38 4. The Shift to a Multi-Polar World .......................................................................... 39 5. The Silk Road Grows......................................................................................39 6. EU Whats Next...........................................................................................39 7. US Presidential Campaign Rocks the World .................................................39 8. Assassinations Covert Operations Get Obvious ..........................................39 PART III SCIENCE TECHNOLOGY..........................................................40 9. The Space-Based Economy.............................................................................40 10 Health Freedom..............................................................................................40 11. Zero Integrity Systems....................................................................................40 PART IV THE BIG QUESTIONS....................................................................41 12. What does Richmond Valentine Want..........................................................41 13. The Future of Cash.........................................................................................41 III. FINANCIAL MARKETS ROUNDUP........................................................................ 44 U.S. Dollar Index ................................................................................................45 Equities .................................................................................................................45 U.S. Equities 1- 3- 5-Year Sector Performance ..................................................45 IBB Biotech ................................................................................................................ 46 Obamacare ETFs XLV IHE IHF IBB IHI.......................................................46 Motif Investing.....................................................................................................47 ITB U.S. Home Construction ...........................................................................48 IYR U.S. Real Estate .........................................................................................48 OIL Crude Oil ..................................................................................................49 U.S. Coal Producers .............................................................................................49 RSX Russia OIL Crude Oil............................................................................50 DAX Germany...................................................................................................50 FXI China Large Caps .......................................................................................51 PIN India ..........................................................................................................51 EEM Emerging Markets.....................................................................................52 WAFMX Frontier Markets.................................................................................53 Fixed Income........................................................................................................53 AGG IEF TLT JNK .........................................................................................53 Commodities GLD SLV......................................................................................54 CRB Commodities Index...................................................................................54 YTD Commodities Performance..........................................................................55 Baltic Dry Index...................................................................................................55 4 Introduction The rules of this world were simply not built for your benefit. And in an era of extreme economic change whose only corollary is the first Industrial Revolution there are no safe harbours left only the comparative safety of the ocean. Your goal is not to find a quiet secure job somewhere near an affordable suburb settle down and then wait for death. The economy that supported such ambitious goals is ending. The developed world is now in a state of permanent structural instability. Seeking after stability is a recipe for homelessness in your late middle age years. In todays world security only comes from embracing opportunity. And opportunity is not randomly distributed in either space or time. It must be pursued and seized. Gordon White from The Chaos Protocols By Catherine Austin Fitts A fter many years of kicking the can on numerous environmental and economic imbalances we have entered the endgame on the industri- al economy Global 2.0 while experiencing the birth and explosive growth in the postindustrial industries Global 3.0. The one thing that is not deflating in the industrial economy is liabilities. Debt. Pension fund obligations. Health care obligations. Rich with reinvest- ment Global 3.0 does not share any of these concerns. Fueled by equity and youthful talent it is engineering and applying new dazzling technologies. The 1st Quarter was intense with these changes. Global leadership struggled to adapt. In the United States political and business leadership are being downsized. It is increasingly their turn to feel expendable. Power is shifting to a younger generation more comfortable with technology and more adaptable to a multipolar world. The exception was the US presidential primary campaigns in which the candidates over age 70 displayed the courage to break ranks with official reality. SOURCE WIKIPEDIA 5 Thank you for being a Solari Report subscriber. Solari_Note_Card_final2_Layout 1 51415 947 AM Page 1 Expect the 2d Quarter to be as if not even more intense. We are into the endgame and structural changes must accelerate. This creates instability in the financial system. It is one of the reasons I have been getting a growing number of questions about cash management. Making sure you have cash and your cash is well positioned adds an import- ant cushion to help you navigate the months ahead. Consequently we have focused our theme in this 1st Quarter Wrap Up Where to Stash Cash in 2016 to help you think through a successful cash management strategy designed to suit your unique needs and situation. Because the news trends and stories were so explosive in the last three months the Solari Report team went to extra lengths to review and distill our links to the ones that would most help you master the trends that are driving events. For this 1st Quarter Wrap Up I asked Dr. Farrell to join me for the initial discussion of News Trends Stories. This is one of the longer discussions you will find on the Solari Report. However when you finish it you will have an outstanding grasp of the world around you and the dynamics impacting your time and money. Last but not least our Financial Markets Roundup walks you through the financial charts that paint an overview of the global flows in equity fixed income and commodities markets during the 1st Quarter. Our goal is to give you a powerful perspective on what has happened in the 1st Quarter that informs the road and opportunities ahead. As Alan Kay once said Perspective is worth 80 IQ points. On behalf of the entire team at the Solari Report I wish you good hunting 6 I. Options for Stashing Cash WHY FOCUS ON CASH First lets take a look at the reasons why more people are thinking about cash these days. Interest Rates Interest rates have fallen significantly since 1980 7 I am not so much concerned with the return on capital as I am with the return of capital. Will Rogers I have been receiving more and more ques- tions about cash management from clients subscribers and personal friends. There are numerous reasons inspiring interest or concern in this area. It helps to look at the forces placing cash and cash management on peoples radar screens and to revisit some basic principles of how to think through your cash management options. Catherine Austin Fitts Cash httpsen.wikipedia.orgwikiCash Interest Rate httpsen.wikipedia.orgwikiInterest_rate Quantitative Easing httpsen.wikipedia.orgwikiQuantitative_easing Negative Interest Rates httpsen.wikipedia.orgwikiNegative_interest_on_excess_ reserves Currency httpsen.wikipedia.orgwikiCurrency Debasement httpsen.wikipedia.orgwikiDebasement Market Liquidity httpsen.wikipedia.orgwikiMarket_liquidity Madoff Investment Scandal httpsen.wikipedia.orgwikiMadoff_investment_scandal MF Global httpsen.wikipedia.orgwikiMF_Global Investors expected the Federal Reserve Bank to raise interest rates throughout 2016 after years of unprecedented quantitative easing. As of March 2016 the Fed has reversed course following a small increase in December and it continues to support low interest rates. In 1990 confidence in the banking system and in federal insurance and regulation was high FDIC-insured bank deposits were generating as much as 8 percent in yield essentially risk-free. Now yields are 1 percent or less and confidence is much lower. Investors and savers are looking for risk-free returns on their cash. At such low interest rates every penny counts. Negative Interest Rates This year the Bank of Japan followed the ECB and other European central banks by lowering interest rates to below zero on excess reserves. As this has hap- pened the market for sovereign bonds has gone to negative interest with ap- proximately 8 to 10 trillion of Euro- pean and Japanese sovereign bonds and bills trading at negative interest rates. Investors in the Americas and Asia want to know how to protect themselves if negative interest rates come their way. Currency Values As central banks around the globe have engaged in quantitative easing in combi- nation with affiliated government deficit borrowing and spending programs cit- izens have experienced a debasement in currency and sovereign credit. In short purchasing power is falling for funds held in cash with no return. The losses from debasement of currencies have been significant in many areas. When savers or investors maintain cash at low to no yield they run the risk of losing purchasing power unless their currency is rising relative to other cur- rencies or if the price of commodities and hard assets falls in a deflation. The US dollar has risen since 2014 while commodities have fallen. This means that holding dollars has been relatively more attractive than holding currencies of countries that depend on commodity revenues such as Norway or Canada. The value of a currency is dynamic whether it is relative to other fiat curren- cies precious metals or local purchasing power. Liquidity When an asset is liquid we can access and use it immediately with no ques- tions asked or conditions imposed. And we can do so without losing value or paying high transaction fees. One of the reasons we hold cash is that we want liquidity. We need cash to pay ongoing expenses and overhead. With increased government intervention banks and financial institutions have be- come much more sticky about 8 I. Options For Stashing Cash facilitating cash withdrawals or trans- fers. This change is causing savers and investors to think through what kinds of liquidity they really need and how to make sure they get it. Cash is also one of the basic allocations in investment strategy. We want cash available to invest at the opportune moment. Or we want to go to cash when it is time to sit on the sidelines. As Jesse Livermore once said Every once in a while you must go to cash. Integrity of Digital Systems If the utilities industry had the integrity of the digital software media and com- munications industries we would all be dead from electrocution. It has become obvious that digital sys- tems lack integrity. Frequently these systems have been designed as honey traps to invade privacy and to provide surveillance via consumer functions. Or they are subject to a world of mar- ket manipulation cybercrime and cyber-warfare. The fundamental law- lessness of the digital world is a serious challenge to the global financial system. Our payment and financial transactions flow on train tracks with little privacy and questionable integrity. One of the results of lower financial transaction fees and online access is that cash is an increasingly digital phenom- enon. Consequently it is essential that when systems crash our cash does not disappear with them. Savers are increasingly thinking through what digital lawlessness means to saving and managing cash. Integrity of Financial Institutions Government Regulation and Enforcement Whats not to worry about Rounds of bailouts essentially moved trillions of dollars of bank and private debt onto government balance sheets. Now both government and private debt are running at very high levels. Major financial institutions are consistently engaging in financial fraud often in partnership with governments. We have seen numerous instances such as the Madoff investment scandal and the failure of MF Global to protect investor accounts that have harmed investors and federal regulation and insurance programs have failed to protect their rights. Government enforcement consists increasingly of fining financial institu- tions which is beginning to look a lot like a kickback scheme. Government regulators can share in the profits for allowing these schemes to take place. Bail-Ins In response to public fury over bailouts government regulators in developed markets have been working to create mechanisms where they can resolve the failures of large financial institutions via bail-ins. In a bail-in private creditors must share the burden. 9 Fear of bail-ins in Europe and the United States is growing. In part this fear developed because the bail-in pro- cess is complex and not well understood. Another reason for these fears is the possibility that governments will fail to keep their word and change the rules in a pinch. Recently when asked if it reserved the right to confiscate gold the US Treasury responded that in fact it reserved the right to confiscate all assets Regulators have also changed the rules on money market funds so that the funds can adjust to a rise in redemp- tions with mark-to-market pricing. This change shifts the burden to investors. Integrity of Sovereign Bank Corporate Credits As debt levels continue to grow so do concerns regarding credit quality. There is significant interdependence between governments banks and corporations and consequently these concerns transcend individual credits. They are also about general systemic issues. Cash and cash equivalent assets are highly dependent on sovereign and municipal government guarantees or insurance. And governments typically invest in sovereign and municipal bonds notes and bills. The weakening of sovereign credit weak- ens trillions of assets and institutions throughout the system. When Standard Poors lowered the US governments credit rating from AAA to AA it was not surprising to see the US Department of Justice target SP for an enforcement action. It is not a good sign when the best strategy of the government is to protect its bond rating with terror. When savers and investors in the US dollar consider their cash options they want to understand the impact of these changes on the value of the dollar versus the value of other fiat currencies or gold. They will also want to understand what a general deterioration in the US federal credit will mean to their cash manage- ment strategies. 10 I. Options For Stashing Cash 11 Disinformation Fear Porn OK here goes Catherine on her soapbox. There is incoherent thinking and disin- formation rolling around the Internet and news media. This disinformation is often combined with entrainment and subliminal programming. The goals vary. There are some who wish to create confusion or to keep their readers in a state of fear. Others want to harm those who remain independent of the system. It is good business for the deep state to weaken those who under- stand and oppose its methods. And the deep state can afford to spend a lot of money doing so. However some of this incoherence comes from people who have a limited understanding or are just plain angry. Lets face it anger is an understandable reaction to the fraud in the system. And some news sources even find that fear helps them sell more products. Oth- ers are simply frauds their antifraud speeches provide air-cover for scams. Financial risks can be defined and managed without fear. If a news source or financial marketing is putting you into fear turn it off delete it or hang up the phone or the chat box Our goal at the Solari Report is to help you think through the primary issues and options so that you can interact with financial institutions and providers with basic intellectual mastery in a state of coherence. Going Cashless If you want to worry about something that is worth worrying about I suggest that you worry about sovereign gov- ernments cancelling physical cash. In this case all of your fiat currency will be in the data cloud. Your balances and transactions will be accessible in real- time and integrated with all the other government and central bank databases in a manner that can be used to tax to manage and to manipulate you. Your money will then be a part of what I have referred to as the databeast. The argument to go cashless is all about lowering transaction costs a goal of particular importance when you are trying to create payment systems in the emerging and frontier markets that can ultimately lead to one or more global digital currencies. However the centralization of currency control has been devastating to local economies. Going cashless will do more of the same. Savers and investors are increasingly asking how can I keep cash if gov- ernments and central banks push for a cashless society First and foremost please push back Read Why We Should Fear a Cashless World here httpssolari.comblogwhy-we-should-fear-a-cashless-world 12 WHY ARE YOU HOLDING CASH I t is essential to understand why you are holding cash before you can determine where and in what form you wish to hold it. Some Cash You Hold for Liquidity Ongoing Local Transactions and Payments You hold cash in checking accounts in banks or credit unions or in your wallet to make ongoing payments in your day-to-day lives and businesses. You may pay with legal tender currency checks or ATM cards. Ongoing Online and Remote Payments You likely hold cash in online accounts in a bank or credit union or in an online payment service such as PayPal to make ongoing payments in your day-to-day lives and business. Some Cash You Hold for Financial Stability and Soundness Physical Cash Many of us keep physi- cal cash as part of our core position. This can be held at home often referred to as under the mattress close by or far away depending on what kind of a rainy day or emergency you are prepared to handle including disaster recovery. If you are con- cerned about the stability of the financial system you may want to hold cash out- side the banking and brokerage system. If you are concerned about privacy you may prefer to transact with cash. If you are concerned about the value of the fiat currency in your jurisdiction this stash may be kept in other fiat currencies or in gold and silver which may fluctuate in value relative to your home currency. Recent efforts by governments to reduce Legal Tender httpsen.wikipedia.orgwikiLegal_tender Fiat currency httpsen.wikipedia.orgwikiFiat_money Foreign exchange risk httpsen.wikipedia.orgwikiForeign_exchange_risk Market risk httpsen.wikipedia.orgwikiMarket_risk Interest rate risk httpsen.wikipedia.orgwikiInterest_rate_risk Credit risk httpsen.wikipedia.orgwikiCredit_risk Liquidity risk httpsen.wikipedia.orgwikiLiquidity_risk Deflation httpsen.wikipedia.orgwikiDeflation Principal httpsen.wikipedia.orgwikiBond_financePrincipal Return of capital httpsen.wikipedia.orgwikiReturn_of_capital Return on capital httpsen.wikipedia.orgwikiReturn_on_capital Cash management httpsen.wikipedia.orgwikiCash_management Investment management httpsen.wikipedia.orgwikiInvestment_management I. Options For Stashing Cash 13 Our financial system depends on the rule of law. The deterioration of the rule of law is a political problem. Ultimately there is no way to protect assets against people who steal and kill with impunity. the availability of large denomination bills are making it more cumbersome to build and maintain large physical cash holdings. Core Position This is cash you hold as working capital for future payments and transactions as well as a rainy day reserve. This core position may build up from income or investment income and can be transferred or reserved for the future payment of overhead and expenses. A rainy day reserve would be additional amounts held for emergencies. For most people the majority of their core position is held in one or more accounts at a bank credit union or brokerage firm. It is cumbersome to hold this position in physical cash if it is sizeable or if it must be transferred nation- ally or globally. Some Cash is Held as an Investment Position Most investors prefer to maintain some cash balances in anticipation of invest- ment opportunities. Cash may be a desirable position when markets are in a bear trend and an inves- tor wishes to go to the sidelines to avoid market or interest rate risk. Cash may be a desirable position when markets are uncertain and an investor wishes to avoid credit risk or liquidity risk or simply prefers to keep assets out of the financial system Cash may be a desirable position when a currency is increasing in value or there is a deterioration in the value of commod- ities and hard assets usually as part of a general deflation The amounts that you put into these pots may be impacted by your preferences relat- ed to return of principal versus the return on principal and what risks you are willing to take to achieve those returns. Obviously there is a relationship between your cash management and your investment management. These issues bleed into one another. So while we are focused on cash management in this report be aware that your cash management and investment management also need to be integrated. Remember many of the problems raised in a discussion regarding cash management underscore that our problems are political distrust of the government and the reg- ulatory system is growing. Our financial system depends on the rule of law. The deterioration of the rule of law is a political problem. Ultimately there is no way to protect assets against people who break the law with impunity. The only way to deal with this problem is to organize in order to make it much more difficult or even impossible for people to steal and kill with impunity. If we continue to donate to to vote for and to bank with the people who break the law we will continue to experience a deterioration in our cash management options and in all other areas of our lives and finances If you are supporting such people or insti- tutions please stop You are putting your cash at risk by doing so. 14 WHO IS YOUR CUSTODIAN B efore you decide on the form in which you will hold cash you must first decide on the person or institution you will select as a custodian. The choice of a cus- todian is your single most important decision. The custodian is the holder of the cash. This is the person or institution you are looking to for liquidity safekeeping and the return of your cash. Excellent custodians and excellent custodial relationships are the backbone of successful cash management. You may hire a banker a broker or an invest- ment advisor as a custodian. The question is who really has the cash If your bank keeps its cash in a correspondent bank you need to know what that bank is and whether or not it is sound. If your broker or advisor uses a brokerage firm for custodianship and clearing you need to know what that firm is and to understand your legal relationship with it. The people who lost money in the MF Global failure were surprised to hear that their brokers broker was MF Global and that some or all of their gold or money was gone Here are your options for selecting a custodian 1. You You hold cash in your mattress behind your kitchen cabinet or in one or more home safes. Storing cash yourself is economic and offers privacy and proximity. However you run the risk of theft or home invasions which is why I often recommend more than one safe. You may also run the risk of forgetting where you put your stash or that your heirs wont know. For a great overview of your home storage options see Solari Report How to Buy Install a Safe httpssolari.combloghow-to-buy-and- install-a-safe-with-dan-perkins 2. Depository You can store physical cash and valuables in a depository in or near your jurisdiction or anywhere in the world. A depository is an enterprise that specializes in storing valuables for customers. Some depositories require names. Some will operate with only Custodian Bank httpsen.wikipedia.orgwikiCustodian_bank Mint httpsen.wikipedia.orgwikiMint_facility Depository institution httpsen.wikipedia.orgwikiDepository_institution Bank httpsen.wikipedia.orgwikiBank Bank safe deposit box httpsen.wikipedia.orgwikiSafe_deposit_box Credit Union httpsen.wikipedia.orgwikiCredit_union Brokerage firm httpsen.wikipedia.orgwikiBrokerage_firm Clearing httpsen.wikipedia.orgwikiClearing_28finance29 Depository bank httpsen.wikipedia.orgwikiDepository_bank Government httpsen.wikipedia.orgwikiGovernment I. Options For Stashing Cash 15 numbers please do not lose your number. Example Das Safe in Vienna Austria httpwww.dassafe.come_index.html Some mints that make precious metals coins and bars may also provide depository services. Precious metals dealers sometimes offer depository services something that I and Solari Report guests generally discourage. Some depositories will permit you to autho- rize an accounting firm or law firm to act as your agent. Some permit online access and communication. The advantage of a deposi- tory is that it is not part of the financial sys- tem although it may have affiliations. You are holding an asset outside the banking and brokerage transaction and settlements systems. 3. Depository Institution Most people in the United States hold cash in one or more depository institutions that accept and transfer monetary deposits from consumers including savings banks com- mercial banks savings and loan associations and credit unions. Many depository institutions also offer safe deposit boxes for those who prefer to deposit physical cash and valuables in the same place where they deposit cash in the banking system. Increased government regulation and con- trol of banks is often cited as a reason why people prefer to store valuables at an inde- pendent depository as opposed to a deposi- tory institution. Credit unions are member-owned coop- eratives and are another popular form of depository institution. 4. Brokerage Firm or Broker-Dealer You can hold cash and cash equivalents in a brokerage firm that offers access to a wide variety of securities options not available at a bank although some banks have a bro- kerage or asset management affiliate. You will want to make sure that you understand who the custodian for your firm is typi- cally the firm is the custodian if it is a large institution and that you understand who provides clearance services. 5. Government Some governments act as custodians for direct investment in government bills notes and bonds. For example US Treasury Direct Trade httpswww.treasurydirect.govtdhome.htm Perth Mint CFQ6naQodd04BjQ RBC Mint Kiwibank httpsen.wikipedia.orgwikiKiwibank Western Union httpsen.wikipedia.orgwikiWestern_Union E-commerce Payment Systems httpsen.wikipedia.orgwikiE-commerce_payment_system PayPal httpsen.wikipedia.orgwikiPayPal Gift Card httpsen.wikipedia.orgwikiGift_card Payment Cards httpsen.wikipedia.orgwikiPayment_card 16 Governments may also act as custodians for precious metals holdings through an affiliated mint. Post offices in many countries facilitate money orders and end up serving as custodians for the resulting float. In some countries post offices may have affiliated banks. When tax overpayments are rolled over the government is acting as a custodian for a cash- like instrument. When I ran Hamilton Secu- rities I insisted that the firm be aggressive in paying estimated taxes. This sum turned out to be a fantastic cash reserve that saved my ba- con when the nightmare scenario came true. 6. Payment Systems There are numerous types of payment sys- tems including e-commerce payment systems that facilitate transactions and issue money orders and travelers checks. In essence they end up serving as custodians for the resulting float. 7. Consumer Goods Companies and Vendors I typically maintain a balance of 50 to 100 on my Starbucks card. Starbucks has done very well financing itself with prepaid sales through payment and gift cards as part of their digital and mobile-friendly strategies. At any given moment consumer goods com- panies are responsible as practical custodians for an enormous float as a result of such payment mechanisms. Whether I stockpile them or use them as Christmas and birthday presents these cards and online credits are a growing alternative form of cash. If you use them please make sure that you do so without losing a large skim to fees and transaction costs. Numerous phone cards border on the fraudulent with high transaction costs and fees. Prepaying vendors may be another way to stockpile cash. You need to make sure that you limit this practice to vendors who can be trusted to perform even if you prepay. I have always tried to pay vendors as quickly as possible rather than waiting the requisite 30 days. I have found that paying quickly trans- lates into good communication and trust when trouble comes. 8. Personal Network One way to keep cash balances outside the financial systems is to gift or to make loans to trusted family members and friends. Solari Report subscribers have often heard the story of my realizing that I had loaned or given 250000 to family and friends. As actions by the federal government cut off my sources of personal and business income and credit the slow return of those funds kept me afloat for years. Without that capital and goodwill I would never have made it. These are cash balances that ambitious regulators and tax authorities will be hard pressed to seize. I would add community loan funds and CDFI httpsen.wikipedia.orgwikiCommunity_development_ financial_institution Hawala httpsen.wikipedia.orgwikiHawala Cryptocurrency httpsen.wikipedia.orgwikiCryptocurrency Bitcoin httpsen.wikipedia.orgwikiBitcoin I. Options For Stashing Cash 17 community-developed financial institutions CDFIs under the personal network catego- ry. Many of us are comfortable transferring savings to these funds as a result of our per- sonal networks. In my experience a sea- soned well-managed community loan fund often offers short-term or intermediate-term options and attractive returns relative to the general market. Numerous groups globally practice savings circles called partnerships or hands. They meet regularly at a set time weekly or monthly. At these meetings each member puts in an agreed-to amount of cash. For example they may meet monthly and the hand is 100. Twelve members each put in 100 in cash and one member takes the full amount of 1200. Over time rather than a depository institution getting the float the circle members get it. This is how they save for a deposit on a car or home or help each other get out of debt. Another example of an informal network that offers money transfer through brokered credits outside the formal banking system is the Islamic Hawala system. Personal or private networks offer a way to distribute assets into other jurisdictions privately outside the formal banking also known as a surveillance system. 9. Anonymous Internet Servers There are companies that hold themselves out to be online banks and are able to do so because they are not subject to normal bank- ing laws and regulations. For example they may be based on an Indian reservation or in an offshore haven. They do not describe their legal and governance structure. They provide little or no information about their board of directors or managements. They do not pro- vide information regarding their auditors and audits. They do not provide financial state- ments or any form of third-party verification. They do not have access to governmental deposit insurance. They are in essence a complete mystery. Then of course there is cryptocurrency of which the most popular form is Bitcoin. These are fiat currencies that do not enjoy the backing and support of a government or a central bank. They offer the ultimate in fiat. Deposits of these currencies are not insured and their exchange values vary widely as being relative to the currency in which the majority of your transactions are denominat- ed. Generally they are not widely accepted although online acceptance is growing. More than a few holdings have disappeared through the hacks of a Bitcoin exchange including Mt. Gox. Flexcoin bitstamp and BTER. These businesses are the custodial equivalent of the wild west. I do not think of them as cash options. Rather they are speculative investments. I bring them up here because there is a significant effort to market Bitcoin and other services as a cash option offering anonymity and safety outside the system. My advice is buyer beware In closing let me repeat excellent custodi- ans and excellent custodial relationships are the backbone of successful cash management. 18 LOOK FOR EXCELLENCE A number of steps that will help you determine excellence in a custodian or a financial insti- tution can be found in the Solari article How to Find a Local Bank httpssolari.combloghow-to-find- a-local-bank Lets go through the basic steps. Intelligence Collect Information 1.Start with the website of the institu- tion. Typically the better the leader- ship the greater the disclosure that private companies provide directly through their About Us or Investor section. You will want to gather as much information as pos- sible about who owns controls governs and manages a private company. Excellence in leadership is what I look for first. 2.If the institution has stock that is publicly traded on the US stock markets you can access the EDGAR system at the US Securities and Exchange Commis- sion SEC to view the annual report proxy prospectuses and other filings including notices of any recent material changes. Check material changes by reviewing the last 10 to 20 years of stock performance relative to peers and to the general market index. You can use Yahoo Finances 10 Year SPY SP 500 Interactive Chart Com- parison here echartssSPYInteractive This may indicate market opinion of the quality or financial performance or both of your institution. 3.If an institution is a regulated bank that uses government insurance you should be able to access reports from the regulator or insurer. For example you can access the FDIC disclosure and call reports on the banks that use FDIC insurance. 4.Check with bank and credit rating ser- vices to find third-party analyst assess- ments of a bank company or government How to Find and Evaluate a Local Bank httpsolari.comarticlesbank_locallyfind_local_banks Yahoo Finance 10 Year SP 500 Interactive Chart Comparison allowChartStackingtrue Governance httpsen.wikipedia.orgwikiGovernance Management httpsen.wikipedia.orgwikiManagement EDGAR System httpswww.sec.govedgarsearchedgarcompanysearch.html FDIC BankFind httpsresearch.fdic.govbankfind Bank Rating Services httpwww.dfi.wa.govconsumersbank-rating-services Credit Rating Agency httpsen.wikipedia.orgwikiCredit_rating_agency The Big Three Credit Rating Agencies httpsen.wikipedia.orgwikiBig_Three_28credit_rating_agencies29 FINRA httpsen.wikipedia.orgwikiFinancial_Industry_Regulatory_Authority FINRA BrokerCheck SEC Check Out Brokers and Investment Advisors httpswww.sec.govinvestorbrokers.htm SEC Investment Advisor Public Disclosure Municipal Securities Rulemaking Board MSRB httpsen.wikipedia.orgwikiMunicipal_Securities_Rulemaking_Board MSRB Electronic Municipal Market Access EMMA PACER Public Access to Court Electronic Records I. Options For Stashing Cash 19 credit worthiness or that of its securities. 5.If the institution is a US brokerage firm or if it involves an investment advisor check the FINRA filings at FINRA or the SEC. 6.If the institution is a sovereign national government or a municipal govern- ment or related agency you should be able to access extensive budget and financial disclosure at their website. In the United States municipal bond issues provide extensive documentation that can be found at the online system available from the Municipal Securities Rulemaking Board MSRB. Disclosure on corporations banks and sovereign and municipal issuers may also be available from brokers banks and rating agencies. 7.If the institution is a not-for-profit it is required to make disclosure available as a matter of law in many jurisdictions. For example not-for-profits in the United States are required to make three years of tax returns publicly available. If these re- turns are not available on their website you can request them by mail. If the institution makes it difficult to access them it should be dropped from consideration. 8.Search news services on the Internet for red flags. In the United States check the Better Business Bureau for com- plaints and the PACER system to review case and docket information from federal appel- late district and bankruptcy courts. Remember this method will not access court records that have been sealed or disappeared. Recommendations Network with friends family members trusted professionals and business people lawyers financial advisors CPAs asset man- agers if doing so does not disclose informa- tion you would prefer to keep confidential. Ask for recommendations of custodians whom they use and recommend. Pay par- ticular attention to recommendations that speak to both the integrity and service of a custodian. I have found that trusted experts save a great deal of time in determining who is the best custodian in a given role or location. Personal Phone Calls and Visit Personal contact and visits can make a big difference. Even when someone insists that he or she is not knowledgeable to determine if an institution is qualified I find that such a person can learn a great deal by speaking with and then visiting a potential custodian personally. Financial regulation often stresses the impor- tance of knowing your customer. Personal visits and communication go a long way not simply for successful due diligence but in ensuring smooth communications and trust including when things go wrong. It is im- portant to ensure that things keep going right I have to say it one more time. Taking the time to ensure that you have excellent custodi- ans and that you enjoy excellent relationships with your custodians provides an essential infrastructure for successful cash management. Dont worry about financial products and returns until you have first established an excellent infrastructure. I. Options For Stashing Cash CASH MANAGEMENT OPTIONS N ow that you have thought through what cash you want for what purposes and what reliable custodians are available to satisfy those purposes it is time to review the options under the umbrella of the types of custodians. This is an overview of options not an exhaustive or detailed list. Consequently once you have built your framework and you know what you would like to see it will pay to drill down into the particulars of specific custodian offerings. The Custodian You Where you are your own custodian you can hold cash in the currency bills and coin that is legal tender in your jurisdiction as well as in currencies from other jurisdictions. Foreign currencies are generally available from large banks and currency exchange businesses in money centers or at interna- tional airports. Because I consider precious metals to be a form of money I would consider them as cash. As interest rates stay low or even go negative precious metals become more attractive relative to fiat currency. If govern- ments shift to cashless precious metals coins and bars will become even more attractive. You can put them in your pocket and walk down the road to bribe the border guards See our Precious Metals Market Reports library at the Solari Report resources area for discussions of the relative merits of holding gold and silver and of using gold and silver coins to provide liquidity. Our online Silver and Gold Payment Exchange Calculator assists you in converting between gold and silver coins and global currencies. You can also hold cash in the form of money orders travelers checks gift and payment cards and stamps particularly if they have forever values. In addition you can maintain securities cer- tificates at home. However if you do so you will limit their liquidity. Getting certificates out of the system and getting them back in is becoming more and more expensive and cumbersome. My preference is to keep secu- rities within the system with rare exception. CASH httpsen.wikipedia.orgwikiCash COIN Legal tender httpsen.wikipedia.orgwikiLegal_tender Jurisdiction httpsen.wikipedia.orgwikiJurisdiction Banknote httpsen.wikipedia.orgwikiBanknote Precious Metal httpsen.wikipedia.orgwikiPrecious_metal Travelers Check httpsen.wikipedia.orgwikiTravelers_cheque Money Order httpsen.wikipedia.orgwikiMoney_order Time based currency httpsen.wikipedia.orgwikiTime-based_currency Barter httpsen.wikipedia.orgwikiBarter International Reciprocal Trade Association IRTA https en.wikipedia.orgwikiInternational_Reciprocal_Trade_Association Sharing economy httpsen.wikipedia.orgwikiSharing_economy Freecycle network 21 If you maintain physical certificates at home please make sure that they are stored in a fire-proof safe. To implement a successful cash management strategy you must reduce your need for cash. That means using your cash to pay off mort- gages car loans student loans credit card debt and personal and business loans. It may also mean investing in greater self-sufficiency in a manner that permanently reduces your overhead. I often tell the story of clients who found that falling yields on investments and rising water bills were squeezing their household budget. The resolution was to sell securities and to reinvest the money in a well for their home. Similar examples involve providing for independent energy systems or gardens orchards and edible landscapes. Another way to reduce future cash needs would be to stockpile nonperishable goods. This includes items you are sure you will need such as office supplies that can be purchased during advantageous sales. It may also include items that are useful for trading purposes. During the collapse of the general economy in Russia during the 1990s it was reported that vodka served as a much more liquid currency than gold and silver. Person- ally I have a stockpile of liquor including lots of smaller bottles and other goods that are attractive to barter and trade. If the banking system or markets go to neg- ative interest rates or go cashless you will be well served by investing your cash to reduce future cash needs. Barter local-time banks and local sharing and gifting services such as the Freecycle Network are examples of numerous meth- ods used to facilitate local regional and even international liquidity of goods and services without paper currencies. Please make sure that you have thought through all the security issues involved in keeping cash at home and how you will han- dle some of the fact patterns that contribute to significant losses from a home depository Theft this includes thefts by profession- als including professionals tipped off by family friends and service providers such as cleaners plumbers electricians and pest control personnel who have access to your home. Unfortunately thefts by family and personal friends also happen so think carefully about who knows that you main- tain valuables in your home. Home invasions the pros expect you to give up the goods under stress. Fire make sure you have fire-proof stor- age solutions. Good records dont laugh some of the greatest losses on home savings occur when people forget where they put the precious metals or cash stash. Or their heirs do not know and ship the box of gold coins out to the yard sale without realizing it. One of the most sensitive issues is whether or not you will insure your household holdings or provide disclosure to law firms and CPA firms. I am of the opinion that doing so may increase the risk of theft unless you provide coverage through an umbrella policy. This permits a certain amount of discretion on how you report your home inventory. I. Options For Stashing Cash Depository If you decide to use a professional deposito- ry instead of storage at home you need to consider The location of your depository do you want it within your jurisdiction or far away in an entirely different juris- diction You may want your cash gold silver and documents nearby so that you can access them quickly. Or you may want them in Switzerland or Singapore so that you have assets available to fund your needs globally. How much physical space do you need For example silver bars can add up in terms of volume and that can get expensive. Who will have access to the depository Do you want the registration to be arranged in an anonymous number or name Insurance do you want an insured facility or will you arrange for insurance through your own carrier Once you know what you want you can determine your options in the jurisdictions in which you are interested. Again a mint or some other precious metals dealer will sometimes serve as a depository for precious metals. There are inherent conflicts-of-interest in these roles and generally I discourage them unless the mint is government-affiliated. Remember if your jurisdiction moves to a cashless system or negative interest rates or both a cash stash in a depository could become expensive very quickly especially if you must fly to another jurisdiction to liqui- date your stash. Banks Your cash management options at most banks will include checking demand deposits savings money market deposit accounts and time deposits including certificates of depos- it. Sovereign deposit insurance is available on most or all forms of deposits in the developed countries. Numerous other assets purchased through or held by banks may not be insured including government bonds stocks mutual funds insurance products and or assets held in safe deposit boxes. Transaction Account httpsen.wikipedia.orgwikiTransaction_account Savings Account httpsen.wikipedia.orgwikiSavings_account Time Deposit httpsen.wikipedia.orgwikiTime_deposit Certificate of Deposit httpsen.wikipedia.orgwikiCertificate_of_deposit Money Market httpsen.wikipedia.orgwikiMoney_market Deposit insurance httpsen.wikipedia.orgwikiDeposit_insurance Federal Deposit Insurance Corporation FDIC httpsen.wikipedia.orgwikiFederal_Deposit_Insurance_Corporation FDIC Understanding Deposit Insurance httpswww.fdic.govdepositdeposits Brokered Deposits httpsen.wikipedia.orgwikiBankBrokered_deposits FDIC When a Broker Offers a Bank CD It Pays to Do Some Research httpswww.fdic.govconsumersconsumernews cnspr13cdsfrombrokers.html SEC High-Yield CDs Protect Your Money by Checking the Fine Print httpswww.sec.govinvestorpubscertific.htm Federal Financial Institutions Examination Council FFIEC Consumer Help Center httpwww.ffiec.govconsumercenter 23 In the United States bank deposit insurance is provided by the Federal Deposit Insurance Corporation FDIC an independent agency of the US government. The FDIC provides a full faith and credit guarantee up to 250000 per depositor per insured bank per ownership category. Ownership categories include single name accounts joint accounts certain retirement accounts corporate partnership unincor- porated association accounts revocable trust accounts irrevocable trust accounts employ- ee benefit plan accounts and more. Between different types of accounts and the use of multiple banks one person or family particularly if they maintain trusts and businesses can access a large amount of federal deposit insurance. Significantly greater amounts can be accessed through the use of brokered deposits which are easily accessible through brokerage accounts. Be careful of brokered deposits unless you are buying through a reputable FINRA-regulated brokerage firm and consider deposits only in fundamentally sound banks. If a bank fails the FDIC as regulator be- comes the receiver and the bank or portions thereof including customer accounts may be transferred to a new institution. Under new bail-in procedures bank resolutions can be financed at the cost of creditors including uninsured depositors. Consequently you want to avoid having uninsured deposits. Even if you have insured deposits it is best to avoid bank failures by maintaining insured deposits in well-managed well-capitalized banks. A bank failure can result in short-term unavailability and resulting opportunity costs not to mention sleepless nights and lost time. If you hold a significant amount in bank deposits you will want to make sure that you do not concentrate these savings in one bank if possible. In addition avoid banks that have significant conflicts of interest with propri- etary trading and derivative positions as well as positions and services they are managing for the central bank and federal government. It would be better to focus on banks whose primary business is serving customers like you in which to establish enduring relationships. In theory the FDIC insurance fund could be expended if bank failures were to increase. Given the importance to the federal credit system of maintaining bank insurance in most scenarios I expect the US full faith and credit to stand behind the FDIC as a practical matter as it did to backstop Fannie Mae and Freddie Mac when mortgage fraud bank- rupted them during the bailout period. The only reason not to provide such a backstop would be the intentional political decision to start bank runs. This scenario seems unlikely for the foreseeable future. I suspect that the effort to shift young peo- ple into cryptocurrencies is actually about shifting depositors away from sovereign obligations in order to protect the financial system. If you bank in multiple jurisdictions you should determine if sovereign deposit insur- ance covers foreign banking customers. It may be limited to national citizens. Conse- quently you will be better off maintaining sovereign bonds or securities than unin- sured deposits in an institution in a foreign jurisdiction. 24 I. Options For Stashing Cash Credit Unions Based on data from the World Council at the end of 2010 there were 52945 credit unions in 100 countries around the world. Collectively they served 188 million mem- bers and 1.5 trillion in assets. In the United States most commercial bank deposit services are provided to members of credit unions although their services may be limited by their smaller size. In the United States deposit insurance is provided by the National Credit Union Administration NCUA an independent federal agency that regulates charters and supervises federal credit agencies. The NCUA operates the National Credit Union Share Insurance Fund with the backing of the full faith and credit of the US govern- ment. The Fund insures deposits in all fed- eral credit unions and in the overwhelming majority of state-chartered credit unions httpsen.wikipedia.orgwikiNation- al_Credit_Union_Administration Credit unions may engage in uninsured activities such as brokerage and investment advisory activities. Some maintain cred- it union service organizations which are for-profit subsidiaries that provide expanded services including insurance and investment services. US credit union insurance generally paral- lels FDIC deposit insurance 250000 per institution per depositor per ownership ac- count including single ownership accounts joint accounts and certain retirement and trust accounts. When it comes to making sure that you are covered by deposit insurance I recommend discussing the available options with a bank- er at the institution of your choice. Brokerage Firm Accessing securities through a brokerage firm typically offers the widest selection of cash management options. A brokerage firm may be an affiliate of a bank or credit union. Certain securities such as sovereign bonds may be available for purchase through banks. I like firewalls between financial providers. Consequently I prefer community banks or credit unions that are not affiliated with brokerage operations and do not have large proprietary securities or servicing operations which may present conflicts of interests. I prefer brokerage firms for securities and I do not use them for deposit or banking services. In the United States brokerage firms have access to Securities Investor Protection Corporation SIPC insurance. The SIPC is a federally mandated US corporation which is not-for-profit corporation and is funded by its members. It has authority to borrow National Credit Union Administration httpsen.wikipedia.orgwikiNational_Credit_Union_ Administration National Credit Union Share Insurance Fund NCUSIF httpsen.wikipedia.orgwikiNational_Credit_Union_Share_ Insurance_Fund NCUSIF Share Insurance Coverage httpwww.mycreditunion.govprotectPagesSI.aspx 25 from the US Treasury. SIPC provides insur- ance for up to 500000 of the net equity value in member customer accounts includ- ing up to 250000 of cash. Notes stocks and bonds are covered. However commodi- ties and other holdings are not covered. In brokerage accounts the securities most often used for cash management sometimes called cash equivalents are fixed-income securities bills notes and bonds of the highest credit quality and with shorter ma- turities to ensure liquidity and protection of principal. The highest credit qualities are typically reserved for sovereign governments which have taxing and enforcement powers and are affiliated with central banks that can print currency in which the notes and bonds are denominated. These securities are typically issued by a government treasury or related agencies. In addition political subdivisions may also issue notes and bonds with strong credit rating even though they lack the authority to issue currencies. This would include states counties and their public benefit corporations and agencies. Again using the United States as an ex- ample the US Treasury issues bills notes bonds and inflation protected bonds or TIPs. Related agencies for example the mortgage corporations and funds such as FHA GNMA Fannie Mae and Fred- die Mac also issue notes andor bonds and asset backed securities. Some such as GNMA offer the full faith and credit of the US government. Securities Investor Protection Corporation SIPC httpsen.wikipedia.orgwikiSecurities_Investor_Protec- tion_Corporation Fixed income httpsen.wikipedia.orgwikiFixed_income Laddered programs httpsen.wikipedia.orgwikiLaddering Sovereign Bonds and Bills httpsen.wikipedia.orgwikiGovernment_bond Treasury httpsen.wikipedia.orgwikiTreasury US Treasury httpsen.wikipedia.orgwikiUnited_States_Department_ of_the_Treasury Government National Mortgage Association GNMA httpsen.wikipedia.orgwikiGovernment_National_Mort- gage_Association Fannie Mae httpsen.wikipedia.orgwikiFannie_Mae Freddie Mac httpsen.wikipedia.orgwikiFreddie_Mac Corporate Bonds and Notes httpsen.wikipedia.orgwikiCorporate_bond Repurchase Agreement httpsen.wikipedia.orgwikiRepurchase_agreement Commercial Paper httpsen.wikipedia.orgwikiCommercial_paper Exchange Traded Funds ETFs httpsen.wikipedia.orgwikiExchange-traded_fund Mutual Funds httpsen.wikipedia.orgwikiMutual_fund Credit Rating httpsen.wikipedia.orgwikiCredit_rating Maturity httpsen.wikipedia.orgwikiMaturity_finance GLD and SLV Disclosure in the Precious Metals Puzzle Palace httpsolari.comarchivePrecious_Metals_Puzzle_Palace 26 I. Options For Stashing Cash States counties and municipalities within the United States often issue short-term notes which may be appropriate for cash management investment including revenue anticipation notes RANs tax anticipation notes TANS and bond anticipation notes BANS. One of their attractions is exemp- tion from federal taxes and possibly one or more state taxes depending primarily on issuer and investor residency. Intergovernmental agencies both domes- tically and internationally may also offer credit-worthy notes and bonds. If you include foreign securities in your cash management accounts make sure that you understand the relevant reporting require- ments if you buy or hold these securities in a foreign account as well as any foreign tax withholdings and the implications to your domestic taxes. Finally financial institutions corporations and even large not-for-profits with strong credit ratings or bond insurance issue repurchase agreements commercial paper and notes and brokered CDs that may be prudent holdings for cash management. There are several ways by which an investor can access these securities. One is to buy them individually typically with a plan to hold them to maturity. Many brokerage firms will set up programs with Treasury bills or with brokered CDs to ladder invest- ments scale-out by maturities and auto- matically roll over funds into new bills or CDs as the old ones mature. The advantage of owning individual secu- rities is that the holder does not encounter the risks associated with various pools or funds or the financial soundness of their managers and servicers. You own the bill or the note. It is in your account. It remains there until it matures or you sell it. Your risk is limited to the credit quality of your holding alone not to the other hold- ings in a pool. Your risk includes any vari- ation in price that can result if the holding has a longer maturity and interest rates rise or if it is denominated in another currency that falls in value against your local curren- cy. You will also need to monitor the issuer and other events that may impact the credit quality of your holding. For example what will happen if you buy a note issued by a municipality with a very high credit rating and there is a sudden significant loss in the municipality accounts it does happen that triggers a rating downgrade You will not know unless you are paying attention and have the time to determine whether you should hold or sell your note. In other words holding individual bills notes and bonds means that you will need to manage the logistics of buying and monitoring individual holdings or you can arrange for a broker or investment advisor to help you do so. To avoid the logistics of buying and moni- toring individual securities many individual investors look for professional management of their securities-related cash management options by investing in money market accounts mutual funds or ETFs or hiring active investment advisors. 27 While rating agencies rate the credit quality of individual issues there are special rating services for mutual funds and ETFs. The best known in the United States is Morn- ingstar. Its focus is domestic although international coverage is growing. For cash management purposes you will focus on those mutual funds ETFs or managers that limit their investments to securities appropriate for cash equivalent status high-quality fixed-income securities with short or shorter-term maturities. For example ETFs that hold short-term treasuries or mutual funds that specialize in buying GNMAs or insured municipal notes rated AAA. Mutual funds may have redemption fees that limit initial liquidity. They are generally more expensive than ETFs but they also offer more investor protections. For a good background discussion on the shortcomings of ETF structures see an article I co- authored on the precious metals ETFs GLD and SLV Disclosure in the Precious Metals Puzzle Palace. Not all mutual funds or ETFs are liquid. Unless they have strong sponsors these investments may come with a variety of risks. First and foremost what happens if heavy redemptions put stress on the pools Consequently if you use any fund or pool structure including money market ac- counts you will want to ensure you have chosen one that has strong liquid credits in the underlying securities and enjoys a strong reputation and market liquidity. Or you may want to take the time to buy hold and monitor individual bills notes and bonds. Last but not least when you review cash management options at a brokerage firm whether with a broker or financial pro- fessional or on your own with a discount brokerage website and its customer support please make sure that you understand your options. Never invest in something you do not understand. If you dont understand an investment it is not because you are uneducated or lack financial sophistication. It is because the financial services industry and their repre- sentatives have made things too complicated or they do not explain things clearly. Most brokerage firms have very good websites with sufficient detail to help you understand the particulars of an investment if you are willing to take the time to learn and to ask questions. You can understand. Invest your time in learning the definitions of the terms in- volved. This is why we have provided so many links in this report. Mastering cash management is first and foremost a matter of mastering approximately 100 basic defi- nitions and a few basic financial concepts such as the higher the credit quality or the shorter the maturity the less principal risk. If you find this process lonely you can start a Solari circle where you meet by phone or in person each week with friends who will work with you to build your combined skills at successful financial action includ- ing cash management. 28 I. Options For Stashing Cash Government Sovereign governments sometimes offer ways of investing through the government directly as a custodian. In these cases you are limited to the options they offer as the issuer. Treasury Direct Trade is a US Treasury website where you can purchase and redeem securities directly from the US Department of the Treasury in paperless electronic form including Treasury bills notes bonds TIPs and savings bonds. Government mints sell coins and may offer custodian services. Examples include the US Mint the RBC Mint and the Perth Mint. Consumer Goods Companies and Vendors I covered many of the options in our dis- cussion of consumer good companies and vendors as custodians. Whether gift and payment cards phone cards or credits with companies you use or vendors with whom you do business think of creative ways of keeping your cash working for you without having it in a financial institution. If nega- tive interest rates head your way a reputable phone card may hold value better than the cash in a financial institution or brokerage account. Good will from a vendor is better than paying a financial tax in the form of negative interest rates. Personal Networks Personal networks have always been one of the most interesting areas of cash manage- ment for the families that I have known as subscribers or clients. I have seen many grandparents and parents gift or transfer funds to children and grand- children where the funds pay for educations and first-time homes rather than have to deal with taking responsibility for preserv- ing it in a corrupt financial system. Families and friends also make personal loans. Some- times these are very successful. However sometimes they discover that corruption is everywhere sometimes in untrustworthy family members. Some of my experience with savings clubs and circles has been with immigrant groups who did not trust the privacy and confi- dentiality of the banking system but could trust each other. One of the most gratifying examples I have seen was a church in Norfolk Virginia that counseled the congregation members about 29 how to manage credit cards and get out of debt. They would then raise special tithes and pay off the debt of a family. Over time the church congregation working together was able to significantly improve its mem- bers financial condition. While we all need to beware the deteriora- tion of ethics in our personal networks opportunities to financially support our allies as their support us is how we build powerful networks. I had to laugh during the financial crisis in 2008. I spoke to one investor who was in the process of buying a Swiss sovereign bond but discovered that the interest rates had turned negative on the Swiss bonds inasmuch as so many investors were seek- ing safety. I asked her what she had done. She said instead she transferred the money to and proceeded to make inter- est-free loans to entrepreneurs throughout the emerging and frontier markets. Ap- parently no interest rates were better than negative interest rates. Besides she said she knew the entrepreneurs would pay her back Anonymous Servers There is a tremendous amount of excite- ment in many quarters around cryptocur- rencies including Bitcoin. Cryptocurrencies are not yet candidates for cash management. Their custodian networks depends on digital systems and websites that are insecure their regulator and tax treat- ment are typically uncertain and their values can fluctuate even widely. It is a bit like depositing funds in the middle of a foreign war zone. As mentioned previously one of my con- cerns is that a lot of good-hearted people are spending time and money prototyping and developing Mr. Globals digital currencies for him one that gets the leadership out of maintaining sovereign deposit insurance and will give then yet again another intelli- gence advantage in surveillance capital. Many of my allies argue that this is where things are going to go anyway so we might as well jump on board and learn how these digital fiat currencies work. That argument has merit. Just understand that your expen- ditures on cryptocurrencies are prototypes and are highly speculative in nature. Cryptocurrencies are not yet options for cash and cash management. This concludes our overview of cash man- agement options. If I could remind you of one word you want to focus on it is excel- lence. In a risky environment caution is advised. You want to seek out the highest quality in custodians issuers securities and service providers. 30 I. Options For Stashing Cash WHAT IF L ets run through several what if scenarios that may impact your cash management options. Negative Interest Rates If negative interest rates move from Europe and Japan to your markets you may find that rollovers of cash and short-term fixed in- come run the risk of yielding zero or negative returns. This could impact your bank deposits and CDs bank and brokerage money markets and short-term fixed income. If you are depending on funds and ETFs they will face the same rollover challenge. The question at that point will be where will you go Owning individual notes and bonds in the intermediate term or long maturities will protect you from rollover interest risks faced by cash holdings or funds. If interest rates start to rise however longer maturities carry principal risk. If the US Treasury markets go to negative interest rates there will be so many profound implications for numerous sectors of the do- mestic and global economy that it is difficult to speculate what might happen. Policymakers will be hoping that funds will be forced out of cash into lending and investing at the same time that the United States will be facing ongoing budget cuts. Predicting the impact that this change may have on com- modities real estate and equity markets will be a significant challenge. Historically the response to government in- tervention that taxes savers to subsidize itself is to decrease trust which decreases investment and liquidity. Redemptions or Runs on Money Market Funds Concerns regarding negative interest rates or liquidity and credit issues in the short- term markets could trigger runs on money market funds. In this case you will want to ensure that you are with the strongest sponsors and custodians and that you lean towards FDIC-insured money markets or money markets that concentrate in the highest possible credits. Runs on Banks You will want to make sure that you are in banks that are fundamentally sound and well managed. Please avoid or chose with care banks and custodians that are affiliated with proprietary trading and derivatives operations that may cause financial problems and con- flicts-of-interest relative to customer accounts. If your deposits are covered by FDIC insur- ance there is no reason to seriously worry about bail-ins at this time unless US politics trigger a change in policies or rules. Every indication to date is that the deep state and regulators continue to want the FDIC system to work well. Needless to say you will want to avoid banks that are likely to experience bail-ins. Your FDIC insurance may work but you will lose time and sleep if you have to depend on your deposit insurance. Runs on ETFs This one concerns me. The ETF industry is young and it has attracted significant funds because it offers lower expenses and in many cases greater liquidity than mutual funds. However it is untested in periods when 31 liquidity seizes up. We have seen repeated warnings from regulators about what could go wrong with ETFs. In assessing preferences between ETFs and other investment options I recommend that you keep the inexperience of ETFs in mind. Runs on Mutual Funds If interest rates go negative or start to rise fixed income mutual funds could experience heavy redemptions. Fixed income managers have had the wind at their backs with falling interest rates and a long-term bull market in bonds. This has been a 36-year-long bull market. Managers do not have a lot of experience with rates going negative or rising quickly. As rates have dropped and concerns about the financial system have grown bond funds have grown. If and when these funds begin to shrink things could head in the opposite direction quickly. You will want to be in funds that inspire confidence in investors so that redemptions do not turn into runs. Governments Go Cashless Oppose this one with all your might. If it happens we are in a zero-privacy world. Local liquidity will diminish further as we are forced into surveillance capitalism mechanisms that will use private data in invasive and lawless ways. This a compelling reason to use your re- sources to permanently lower overhead and the need for cash such as retiring debt to maintain cash in the currency of jurisdictions that remain cash-full and to maintain a core position in gold and silver coins. The Euro Fails This scenario would be painful but it would mean new energy for the US dollar market share for the time being. Do not assume that severe pressure on or the failure of the euro will be positive for gold and silver. Europe is Asias number 1 custom- er. If falling imports of Chinese or Indian goods and services in Europe trigger lower growth rates we could see China and India shift to net sellers of gold and silver. My Government Goes Bankrupt If your government borrows in fiat currency that it can print money out of thin air please stop worrying that your government is going to go bankrupt. It cant go bankrupt. All of its obligations can be satisfied for free. In- stead start doing scenario designs for dealing with currency debasement war and totali- tarianism that will result from a weakening economic situation. However if your government or national companies and institutions borrow in a currency that the government does not print and it is carrying a heavy debt load you face some serious cash management risks and may want to consider holding some cash outside your home currency. Bank Run httpsen.wikipedia.orgwikiBank_run 32 I. Options For Stashing Cash YIELDS F ixed income investments continue to perform well as investors seek safety rather than yields. That performance comes at the price of lower yields on reinvestment. Watching the liquid Treasury ETFs is one of the ways I watch what interest rates are doing. These are included in the charts we post each week for subscribers based on the Friday close the prior week. Here are yields as of April 11 2016 Yield httpsen.wikipedia.orgwikiYield_finance Rate of Return httpsen.wikipedia.orgwikiRate_of_return Interest Rate httpsen.wikipedia.orgwikiInterest_rate SHY the iShares 1-3 Year Treasury Bond ETF has returned 0.9 year to date and had a current yield at the end of the 1st quarter of 0.57. 33 IEF the iShares 7-10 Year Treasury Bond ETF has returned 4.8 year to date and was yielding 1.79 as of the end of the 1st quarter. TLT iShares 20 Year Treasury Bond ETF has returned 8.73 year to date and had a yield of 2.38 as of the end of the 1st quarter. 34 For now the Treasury market is outperforming the high-yield markets. The SPDR Barclays High-Yield Bond ETF JNK has returned 2.11 year to date AGG The Core US Bond Aggregate ETF has returned 3.03 year to date and had a current yield of 2.32 as of the end of the 1st quarter. Most money markets and short-term deposits are yielding little to none. For example Fidelitys Government Money Market Fund SPAXX has a daily yield year to date of 0.0. Their return for the last 1 3 and 5 years is 0.01 Such yields present a significant question do you forego yields on your cash or increase the risk you take by going to lower credit quality or longer maturities Whatever you decide be prepared for interest rates to go lower or higher. The environment is fluid. 35 PLEASE REMEMBER B efore closing there are certain principles that I want to recommend to you that can help you determine the optimal cash management strategy for you. Diversification Do not keep your resources including your cash in one place. You want to have redundant options and not be dependent on any one custodian to perform. Multiple accounts and relationships may require more time and more paperwork. It is worth your time and effort. No Privacy Privacy is important. You should strive to achieve it. Use passwords on digital documents that contain confiden- tial information. Keep your private financial statements under lock and key so that people coming in and out of your home cannot access them. Learn about how to protect your computer and online accounts from com- promise or identity theft including checking and recon- ciling your accounts regularly. This includes checking brokerage accounts after trades are executed or deposits and transfers are made. You need to assume that in the worst case there is no privacy. Do not allow others to get leverage over you because you have broken the law or engaged in illegal or unethical behavior. Seek Excellence Seek excellence in the people and institutions with whom and which you share data and you entrust with your assets. You cannot be too careful. Never compromise on the quality of your relationships and custodians to get yield. Many of us grew up in a world where you could pretty much depend on the regulators and the business community to ensure basic integrity within the system. The world has changed. The person you must depend on to ensure integrity is you. Intellectual Mastery Develop confidence that you can achieve intellectual mastery of any issues related to your cash management or finances. Never do anything you do not understand. Never feel rushed or pressured to make a decision. If someone or something inspires fear on a regular basis replace them with someone who helps you achieve intel- lectual mastery. Build Relationships Financial institutions are required to know your cus- tomer. This is also best practice. You want to know peo- ple at the companies you do business with and you want them to know you. First in person meetings are import- ant due diligence. You will learn a lot by meeting people in person including that it is whether the an institution that does or does not feel right for you. Second things go wrong. It helps to have relationships that facilitate effective communication when they do. Redundant Archives Maintain redundant copies of your legal documents contracts and financial statements in multiple locations preferably in fireproof safes or storage. Remember he who archives writes history. You are Special Every person is unique. Your needs your approach to risk management your goals your situation are all unique you do not fit into a box that can be standardized. Do not accept advice from people who do not under- stand the specifics of your situation or imply that one size fits all. That is why the best approach is to take responsibility to understand what you need and insist that the financial providers help you master your financial affairs. Ultimately you are the governor the chairman of the board overseeing your money. Whatever happens to your money you are responsible for the consequences. I believe you can and will do a great job for you 36 II. News Stories Trends H ere are the trends and stories from the 1st Quarter that will help you stay informed on current events particularly the ones likely to impact your time and money. ECONOMY FINANCIAL MARKETS Coming into 2016 the Federal Reserve pro- moted an expectation that the US economy and employment would grow out of the recession without further quantitative eas- ing. Improving conditions would support quarterly increases in interest rates. Market response to the small interest rate increase of the Fed in late 2015 and the global slow- down was sufficiently unnerving that the Fed backed down on further increases in the 1st Quarter. Concerns about the global economy and the strength and stability of the financial markets grew. 1. Global 3.0 The shift from Global 2.0 industrial economy to Global 3.0 networked econ- omy is accelerating. The divergence in economic strength be- tween cities and regions leading in Global 3.0 and other areas is becoming more pro- nounced. Nothing less than The Economist pointed out that the manner and levels of US corporate establishment profits have been unhealthy for the economy. Indeed consis- tently above market profits result from an increasingly lethal combination of advanced technology and political corruption. Invisible to the average person continued artificial intelligence and automation is sig- nificantly shifting the income and employ- ment landscape. Look for more discussions this year regarding minimum incomes or income guarantees in the developed world as robotics and other forms of automation reduce employment opportunities. Expect civil drone use to be approved in the US in 2016 resulting in an explosion of do- mestic applications in retail agriculture real estate and media for the foreseeable future. Varieties of Inequality The Great Divergence Business in America The Problem with Profits Elon Musk Says Google Deepminds Go Victory Is a 10-Year Jump For A.I. Dominos Unleashes Pizza-Delivery- Robot As 2 Out Of 3 Americans Expect Jobs To Be Automated Canada Plans to Experiment with Giv- ing People Unconditional Free Money G Plans to Beam 5G from Solar Drones 2. Surveillance Capitalism Every day brings another example of lawless- ness in the digital space. In March business professor Shoshana Zuboff published her ar- ticle on Surveillance Capital coining a term that brilliantly captures the systemic lawless- ness contributing to corporate profits. The Secrets of Surveillance Capitalism Zuboff is publishing a book on this topic next year. Meantime we are naming her Solari Hero for the 1st Quarter. 37 The problem is not to find the answer its to face the answer. Terence McKenna PLEASE NOTE The bold text in blue throughout this section indicates a hotlink that will take you to websites pages or videos which will provide more detailed information. Visit the site and use the search function to locate the items. 38 3. Financial Hot Potatoes After years of central bank and government interventions and a financial coup detat that switched trillions in assets leaving the liabilities behind from Global 2.0 to Global 3.0 a highly centralized economy is show- ing more than a few distress signs. Negative Interest Rates In January the Bank of Japan followed European central banks and lowered its in- terest rates below zero. Market reports now indicate that approximately 8 to 10 trillion of European and Japanese sovereign bonds are trading at negative interest rates out to maturities of 10 years. Japans Negative Interest Rates Are Even Crazier Than They Sound Fed Scales Back Rate-Rise Forecasts as Global Risks Remain US Budget Hot Potato For the 20th year in a row the US govern- ment declined to produce audited financial statements as required by law let alone easy access disclosure to citizens for their Con- gressional district or local communities. The US budget hot potato is being pushed into 2017 after the presidential election. U.S. Governments Annual Financial Report Unable to Pass GAO Audit Financial Audit U.S. Governments Fis- cal Years 2015 and 2014 Consolidated Financial Statements Open Letter to My Congressman Pension Fund Hot Potato In a recent Solari Report Don Coxe said that the underfunding of pension funds would become the number 1 issue for the next US administration. The financial coup detat and negative interest rates have turned a problem into a serious crisis that will be- come apparent as the developed world con- tinues to age. Social Security Administration Benefi- ciaries Top 60000000 Californias pension debt puts it 175.1 Billion in the Red. The Theft of the American Pension Commodities Oil After crashing throughout 2015 the oil and commodities prices just kept falling. Imagine what life would have been like for consumers in the developed world without these declines Fossil fuel companies how- ever are hurting with the US coal compa- nies being driven literally into bankruptcy by US policies. BofA The Oil Crash Is Kicking Off One of the Largest Wealth Transfers in Human History Flows Equity market performance and merger and IPO volumes all signaled continued to slow down. The bright spot was the flow of funds into venture capital as the applica- tions of new technology continued to hold promise to improve productivity in the economy. 1st Quarter 2016 IPO Low Venture Capital Draw a Rush of New Money US and Global MA activity down 40 and 25 Private Equity Backed Buy-Out Deals Decrease Sharply in Q1 2016 II. News Stories Trends 39 GEOPOLITICS The more central banks and governments assert centralized control of economies the more our attention is drawn to the politics of resource control and allocations. 4. The Shift to a Multipolar- World Saker has agreed to join us on the Solari Report quarterly to help sort out what it means to move to a multipolar world. Signs abound about the transition under- way. Tensions between the United States and Russia continue with the US actively intervening to block Russia from accessing capital in the international bond market. The importance of the South China Sea was underscored as tensions grew. China spent the 1st Quarter on a global shopping spree to lock up long-term access to income and resources. This included winning Swiss Sygenta for 43 billion after the Swiss had turned down a US offer another indi- cation of the market clout of 1.3 billion consumers. Global frustration with events in the Middle East and Ukraine were voiced by no less than President Obama in a tell-all interview in the Atlantic Monthly More Banks Steer Clear of Russias Bond Sale South China Sea Takes Center Stage at U.S.-ASEAN Summit BP The US Will Be Energy Indepen- dent in 5 Years Swiss Syngenta Finally Say Yes to 43 Billion ChemChina Deal The Neocon Bog Turkey Syria Saudi Arabia Israel Ukraine Atlantic Monthlys The Obama Doctrine 5. The Silk Road Grows Despite the global slowdown the develop- ing world continues to embrace the future. Increased connection is happening at high speed whether trains between China and Eurasia cut transport times by more than half hundreds of millions of Indians get online or China buys into exchanges to improve connection and liquidity between Asia and the global markets. First Silk Road Train Arrives in Iran from China Online Retailing in India The Great Race Marriott wins back Sheraton-owner Starwood with New Offer Chinese Investor Group to Buy Chicago Stock Exchange 6. EU Whats Next While our personal reports are that Europe is as lovely and charming as ever the news is full of tensions in the European Union and the enormous pressures from immigration. Summer is coming with a British referen- dum on the EU and with likely increases in potential immigration. Mark Carney EU Exit is Biggest Domestic Risk Norway Warns Sweden Will Collapse PM Will Defy Geneva Convention To Protect Border 7. US Presidential Campaign Rocks the World When the campaign began I recommended spending no more than 10 hours paying attention and voting for someone under 60 years of age. As things turned out I did not follow my own advice. Trump and Sanders kept creating cracks in the official reality that made for an interesting conversation and gave more people permission to talk about reality. However the defining quality of the campaign was mind control inspiring me to name it The Kingsman Campaign. The campaign raised real concerns among investors that America was not in a position to face and address the challenges ahead. One bright spot Howard Schultz head of Starbucks reminded us that what is im- portant is not the decisions we make every four years but the ones we make every day. Indeed consumer pressures are bringing positive changes in many areas including GMO labeling. The Kingsman Campaign Every Day We Have a Choice 8. Assassinations Covert Operations Get Obvious Lawlessness is not limited to the digital space. Awareness is growing of the use of covert operations and assassinations to implement centralized control as various cartels and factions compete. Doctors Who Discovered Cancer En- zymes In Vaccines All Found Murdered Accused Kalamazoo Gunman Told Po- lice Uber App Took Over His Mind and Body April 2016 The Temple Of Baal Will Be Erected In Times Square In New York City Was Justice Scalia murdered Forget conspiracy theory. This is real. SCIENCETECHNOLOGY The 1st Quarter was full of indications that the energy model is changing with projec- tions of renewables growth showing sharp increases over the next five years. Clearly technology is driving the shift from Global 2.0 to Global 3.0. 9. The Space-Based Economy Our theme for the 2015 Annual Wrap Up published in January was Space Here We Go. Sure enough signs of the space-based economy are everywhere. Lockheed Martin the leading defense contractor announced the formation of an energy group. What will be fascinating to see is whether the new energy comes from the oil and gas industry or from the companies such as Lockheed that have managed the black budget for de- cades. A recent Boeing ad indicated that in 100 years our electricity would be supplied by solar power plants in the orbital plat- form. The implication is that aeronautics and satellites may be more important to our future energy sources than drilling. Boeing Superbowl Ad Just You Wait Space The Final Frontier NASA Establishes Planetary Defense Office Lockheed Martin Forms Energy Group 10. Health Freedom Reality is bursting through the official nar- rative throughout the health sector and the centralized team is pushing back hard. Fights over cancer treatments vaccines and GMOs are escalating. However the momentum is gathering behind the truth helped by the inability of developed econ- omies to fund the pharmaceutical vision. Expect the underfunding of pension funds 40 II. News Stories Trends 41 and related health care benefits to weigh in heavily for preventive health care and effec- tive natural treatments. Documentary Streams Globally Truth About Cancer Federal Australian Governments No Jab No Pay Law Sparks Run on Vac- cines Cheerios Maker General Mills to Label GMOs in U.S. Products 11. Zero Integrity Systems How in the world are we going to depend on digital systems that have zero integrity Nuts Someone ought to explain to all the people crowing about the Internet of things that they are currently outfitting the worlds most frightening battle zone. This is one of the reasons that productivity has flattened. US Government Hands Cyber-Security to Military New Tech Shows Why You Cant Trust Anything You See on the News The IRS Says Identity Thieves Hacked Its Systems Again Etherum Towards a New Bit Society 5 things you need to know about the plan to open source artificial intelligence THE BIG QUESTIONS I keep coming back to the big questions like who are really in charge and why are they behaving this way 12. What does Richmond Valentine Want In the movie Kingsman The Secret Service Samuel Jackson plays a technology entre- preneur who hands out free SIM cards that allow him to mind-control individuals and nearby crowds through electromagnetic manipulation delivered through his global satellite system. Whenever anyone asks me what is going to happen in the campaign my response is It depends on what Rich- mond Valentine wants. This is what hap- pens when an increasing number of news stories are created by reality TV produc- tion companies. The Kingsman Campaign 13. The Future of Cash Cash is a form of currency that provides citizens with the ultimate luxury privacy. Take cash away and all transactions can be monitored and tracked. This also means that negative interest rates can be applied with much greater effect. One of the many benefits of moving to an all-digital platform is that it eases a shift to cyrptocurrencies. If successful this shift could significantly reduce governmental liabilities for deposit insurance. Norways Biggest Bank Calls For Country To Stop Using Cash Central Banks Beat Bitcoin at Own Game with Rival Supercurrency The 1st Quarter was intense. My pre- diction expect the intensity to increase throughout the 2nd Quarter and 2016. Thanks to all the subscribers who sent great story suggestions in the 1st Quarter 42 III.FinancialMarketsRoundup 43 Financial peace isnt the acquisition of stuff. Its learning to live on less than you make so you can give money back and have money to invest. You cant win until you do this. Dave Ramsey Overview This chart reflects prices adjusted for dividends charts below may not. T he 1st Quarter was choppy at best. We finally got a 15 percent correction in the US equity markets. Although prices recov- ered by the end of the quarter investor spirits had not. The Federal Reserve cancelled its anticipated interest rate increase and bonds outperformed equities as investors worried more about return of their principal rather than return on principal. 44 US Dollar Index After 18 months of a rising US dollar index prices softened in the 1st Quarter. III. Financial Markets Roundup 45 Equities Emerging markets outperformed the developed equity markets. However all markets were defined by global corrections and concerns about slowdown in global growth. SCHA US Small Caps SCHM US Mid Caps SCHX US Large Caps PKW Buybacks US Equities 1 3 5 Year Sector Performance Source Morningstar 46 Obamacare ETFs XLVHealth Care Select IHE US Pharmaceuticals IHF Providers IBB Biotech IHI Medical Devices After leading the markets for several years the price of health care equities took a pause. Biotech took a beating IBB Biotech Throughout 2015 biotech continued to outperform the general US market. 47 Motif Investing There is always a bull market somewhere. For the last 12 months as of the end of the 1st Quarter virtual gaming junk securities and democratic party donors performed the best of all motifs. That is not an inspiring comment on the future of our economy 48 ITB US Home Construction US homebuilders outperformed the markets as the US presidential primaries got underway in 2015 but prices backed off with the market in 2016. IYR US Real Estate Real estate held up reasonably well likely by investors seeking yield. 49 OIL Crude Oil Sharply lower oil prices deepened in the 1st Quarter contributing to the drop in equity markets and real concern in the junk bond and bank markets. US Coal Producers Say goodbye to the US coal producers as US energy policy favored gas and renewables. 50 DAX Germany Germany continued to struggle with global slowdown Russian sanctions a meltdown of Deutsche Bank stock and the politics of the EU and immigration. RSX Russia OIL Crude Oil Russia continued to feel the squeeze of G7 sanctions lower oil prices and efforts by the United States to keep the Russian government from selling 3 billion dollars in sovereign bonds into Western capital markets. Despite the head- winds Russian equities outperformed global markets for the 1st Quarter closing some of the significant divergence. 51 FXI China Large Caps The Chinese economy slowed with rising food prices and falling equity prices. PIN India Indian equities corrected and recovered with global markets in the 1st Quarter. 52 EEM Emerging Markets Emerging markets were the strongest area of global equity markets. EFA International Developed International developed equity markets underperformed the US market and emerging markets. 53 WAFMX Frontier Markets Frontier markets also underperformed. Fixed Income So much for thinking that 2016 would finally see the end of the great bond bull Bonds outperformed equities as interest rates went lower and Europe and Japan sovereign bonds moved to negative interest rates. AGG Bond Aggregate IEF 5-7yr Treasury TLT 20yr Treasury JNK High-Yield Long-term treasury bonds outperformed short and intermediate maturities. The high-yield market experienced a serious leg down during the 1st Quarter over concerns regarding lending to and refinancing in the oil and gas sector but recovered the majority of losses by the end of the 1st Quarter. 54 Commodities GLD Gold SLV Silver Gold and silver were the star performers in the 1st Quarter. The big question is whether we have seen the bottom on precious metals or this is a head fake like the one that occurred in 1st Quarter 2015. CRB Commodities Index Read it and weep 55 YTD Commodities Performance Lumber hogs and soybeans got a break. Since I live in a cotton-farming community I still dont feel much improvement.. The shipping indices say that the global slowdown will be with us for a while. Lets see what 2016 brings Looking forward to the 2nd Quarter my advice is Get ready to duck Source Baltic Dry Index 56 COPYRIGHT 2016. ALL RIGHTS RESERVED. SOLARI INC. P. O. BOX 157 HICKORY VALLEY TN 38042