Holt & Shapard Capital Management, LLC

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Dear Clients, This letter summarizes one of the most stunning weeks in the history of financial markets. On Sunday, March 16th, it was reported that Bear Stearns, the 5th largest brokerage firm, was being acquired by JP Morgan for merely $2 a share. Bankruptcy rumors surfaced the prior Friday for the second-biggest underwriter of U.S. mortgage bonds, causing the stock to drop from $55 to $30; a far cry from the $175 Bear Stearns traded at in February, 2007. As suspected, the balance sheet was loaded with highly leveraged, illiquid subprime mortgages, creating massive losses for the firm. Urgently, the Fed orchestrated a bailout involving JP Morgan and $200 billion of financial support from the U.S. Treasury. The parties rushed and completed the deal before the opening of the Tokyo stock exchange, amidst fears of a meltdown in financial markets. Simultaneously, the Fed cut the Discount Rate and announced that they would now allow non-bank financial institutions (brokers) to borrow from the Fed ’s Discount Window. Gold promptly and appropriately soared over $21/oz. to $1033/oz. as foreign capital sought the safety of real money. U.S. stock market futures were naturally projected to open sharply lower, and the U.S. dollar tanked overseas. Now, let me stop for a moment and forewarn you that for the rest of the week, price action of gold/silver as well as U.S. stocks, bonds, and the dollar proved to be the most illogical, irrational, counter-intuitive, and government/Wall Street manipulated market performance that you will ever witness! To jumpstart market “control ” Monday morning, President Bush gathered the President ’s Working Group on Financial Markets, an organization that everyone affectionately (sic) refers to as “The Plunge Team. ” In addition to Bush, Sec.-Treasurer Paulson, and Fed Chairman Bernanke, the group also includes the heads of the S.E.C. as well as the Commodity Futures Trading Commission (CFTC); two individuals whose inclusion would be peculiar were it not for the need to make them aware of the forthcoming market manipulative action. Immediately Monday morning at 8:30am EST, upon the opening of the COMEX market where “paper ” gold and silver are traded, the price of gold was slammed! It reversed $25/oz. in a mere hour, while silver fell nearly $1/oz. to $20/oz. before both metals traded sideways the rest of the day. Sunday, Paulson had vowed, “The government is prepared to do what it takes to maintain the stability of our financial system. ” Thus, if gold is the leading indicator of economic and financial stress in the global markets, then I guess it is awfully important to prevent that (yellow) “canary in the mine ” from signaling shock waves! The overnight collapse of the 5th largest brokerage firm certainly qualified as a shock wave. Also part of the scheme, the DJIA reversed a 300pt. decline, closing up 21 pts., while the U.S. dollar index also recovered. According to Marketwatch.com, a 420 pt. rally in the DJIA on Tuesday, March 18th, was attributed to the following: U.S. stocks on Tuesday blasted skyward, with the Dow rocketing to its fourth-largest point gain ever after earnings from Goldman Sachs and Lehman Bros.

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