Gold World News Flash |
- Is Sovereign Debt Crisis Contained to Subprime?
- Vanishing Gold and Silver
- Don't Lose Faith in the Markets, Lose Faith in Market Orders
- Technically Precious with Merv
- European Bank Risk Soars to Record High
- Moody's, Berkshire and The Sec
- Jim?s Mailbox
- Thanks For The Plug CNBC
- Americans Have Been Bailing Out Foreign Banks for Years ... And We're Getting Ready To Do It Again
- This Past Week in Gold
- NY Post: Feds Launch Criminal and Civil Probes Into JP Morgan’s Silver Trades
- Mark Thornton on Lincoln's Folly, the Civil War and the Impact of the Business Cycle
- Technically Precious with Merv Week Ending 07 May 2010
- Stock Cycles May 2010
- When Silver Explodes Above $100/oz, It Will Never Return to Current, Absurd Price Level
- Get Ready for the European Double Dip?
- International Forecaster May 2010 (#3) – Gold, Silver, Economy + More
- Random musings on Experts
- Ron Paul: There’s Anger… There’s Going to be Riots in the Streets
- Gold Investing: Keep On Keeping On
- U.S. Market-fraud Enters New Era
- Why Spain Isn’t Greece
- Jim's Mailbox
- Bullion & Business Weekend Recap – May 8, 2010
- Mother’s Day Commemorative Coin Act Passes House Twice
- Goldman's View On Europe Bailout Plan #42 - "Unlikely To Calm Markets"
- News media notice of metals market manipulation growing, Butler tells King
- Criminal and civil probes under way into Morgan silver trading
- Jim Sinclair: It's All Over. The Fat Lady Has Sung
- Surging Libor-OIS And Cross Currency Basis Swaps Indicate Europe's Response Is Too Little Too Late
- Sarkozy Will Get “Stuffed”
- Weekly Chartology
- Greece Being Forced to Buy Arms In Exchange for Bailout Says MEP
- Ellen Brown – Stock Market Collapse: More Goldman Market Rigging?
- The latest Greek tragedy And Sovereign Defaults Pose A Great Threat
| Is Sovereign Debt Crisis Contained to Subprime? Posted: 08 May 2010 07:13 PM PDT Peter Schiff submits: As Americans observe the chaos in Greece, most assume that the strength of our currency, the credit worthiness of our government, and the vast expanse of two oceans, will prevent a similar scene from playing out in our streets. I believe these protections to be illusory. Once again the vast majority fails to see a crisis in the making, even as it stares at them from close range. Just as market observers in 2007 told us that the credit crisis would be confined to the subprime mortgage market, current analysts tell us that sovereign debt problems are confined to Greece, Spain, Portugal, and perhaps Italy. They were wrong then, and I believe that they're wrong now. Complete Story »
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| Posted: 08 May 2010 06:45 PM PDT Thursday evening as I was downing a few cold ones with some mates in an Aussie pub, :beer1: talk naturally turned to the Flash Crash on the Dow that day. They said that my little Precious metal stash had increased a fair bit, what with the drop in the Aussie dollar and increase in Gold and silver. :woohoo: I shouted with glee as I dashed out the door to go home and check out my new found fortune. "I'll be back soon, and the next round is on me!!" :Running: I dug out a few of my shiny rounds, and nifty little digital scale. Eagerly placing an ASE on the scale I watched the numbers rise... but something was wrong! It still only weighed 1 oz, and not a gram more. :dontknow: Gold was supposed to have grown even more, so I plopped a gleaming yellow disc onto the scale, but it too still weighed what it always had. Alas, a rogue gravity wave must have stolen away some of my little nest egg! :cry1: Ahh well, I'll just have to hang onto them till another day (perhaps when I can trade them for a few fertile acres, a tractor and some heirloom seeds). So, it was back to the bar to drown my disappointment, a little wiser (and poorer by a round of beer).
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| Don't Lose Faith in the Markets, Lose Faith in Market Orders Posted: 08 May 2010 06:29 PM PDT Kid Dynamite submits: First off, if you've missed my prior posts on the Crash of May 6th, please take the time to check them out now. There is also ample valuable information from knowledgeable readers in the comment threads. They are well worth your time to read through.
Now, where do we go from here? Senators are already calling for investigations and studies, and there will be talk about increased legislation and regulations. Here are my suggestions. 1) IF the NASDAQ wants to cancel trades that are at "crazy prices" - to use the subjective term - and I think it's beyond debate that they do want to cancel such trades, since they already demonstrated such, THEN steps should be taken to prevent these trades from taking place in the first place. There is no reason to allow these trades only to cancel them after the fact. If you want to protect traders from themselves, then PROACTIVELY make sure that the trades can't get printed unless people really want to trade at those prices. Institute market wide individual stock based trading curbs, perhaps similar to the NYSE Liquidity Replenishment Points, but make sure that they apply to price increases as well as decreases, and make sure they aren't structured to attempt to prevent stock prices from falling. We should not try to prevent lower stock prices via legislation! We SHOULD try to prevent "abnormal" trades - if we want to protect traders from themselves. 2) Who are we protecting anyway? I think it's widely agreed upon that no one wants to see professional investors bailed out of computer trading algorithms run amuck. If a crazy computer algo takes a stock from $30 to 1c and then back to $30, who cares? Investors shouldn't care - if you didn't read the news or watch TV intraday, you might not even know that the stock moved! Your portfolio value is unaffected. Traders should absolutely LOVE it! If there are crazy computer algorithms in the market doing crazy things, guess what, that makes it much easier to make money! We rational humans can outsmart algo's gone wild with ease, right? The first thing I did Friday morning was enter a bunch of lowball bids in a number of stocks, PRAYING for a repeat of whatever happened on Thursday. Of course, retail investors who lacked a true understanding of what they were doing got plugged on stop orders, which turned into MARKET orders when their price level was triggered. One claim is that trading activity like this makes people "lose faith" in the market. Don't lose faith in the market - lose faith in market orders! I like that credo. Please join me here at Kid Dynamite's World in declaring war on market orders. One commenter on Ritholtz's blog sarcastically noted, only semi-sarcastically, I think:
I strongly agree with that sentiment, and noted that there's really no reason why we couldn't ban the "market" order type. Really. There's no reason why anyone should ever use a market order. None. In fact, BATS exchange automatically adjusts all incoming market orders to limit orders, where the limit is the greater of 50c or 5% of the stock price: higher for buy orders, and lower for sell orders. Just a little bit of built in protection. So, related to that point: 3) Brokers, especially broker catering to retail investors, should step up their client education platform IMMEDIATELY. It's in their own best interest, obviously. I'm sure E*Trade (ETFC) doesn't want to have to explain to a client why their sell stop order in Accenture (ACN) got filled at 1c. They make you demonstrate experience or investment competence to trade options, and they should do the same with market orders and stop orders. If we want to protect investors from themselves, and again, I think it's been demonstrated that we do, we should educate them and make sure that they have all the information they need to make an intelligent, responsible decision. If someone wants to enter a stop order, they need to be certified to do so - this really isn't a big deal - the SEC could design a 5 question quiz demonstrating that when you enter a sell stop order at a price of $30, you understand that you can get filled at $30.25, $30, $29.99, $15, or 1c. Investors need to understand this, and we need to continue to remove "excuses" from our markets. 4) Should we ban "high frequency trading" ?? I certainly don't think so. As I've noted in my previous posts: of course the increased speed and technology of our modern markets contributed to the severity of the crash - but aberrations due to technological quirks are quickly self correcting (as we saw!) - stocks bounced right back. When fast cars crash, they do more damage than horse & buggy crashes - but we don't ban automobiles. One reason I included the tremendous audio from the S&P Futures Pit in Chicago is that it's an old school market with no computers. The same people who blame high frequency trading for dominating markets also blame them for walking away! (the Wall Street Journal wrote an article stating as much, and others have expressed similarly confused views) Well, non-HFT liquidity providers had ample opportunity to step in and show how much better they were when the HFT guys turned their systems off right before the big downdraft (please read PeterPeter's comment about why HFT guys did this - it's due to problems they were seeing in being able to accurately process information on time). The S&P futures pit audio shows that there was massive illiquidity there also - in a non-computerized, old school market with traditional liquidity providers. No one wants to step in and get run over when markets crash. Computers/no computers/stock/bonds/commodities - it doesn't matter. When markets crash, they crash hard and fast. You can't regulate or legislate that behavior away! 5) Let's not forget something - prices got crushed because there were more (or more aggressive) sellers than buyers. It's not because machines wanted to destroy the world, or because the markets are manipulated. I think the decline was long overdue, as the massive previous rally in the markets was based largely on forced investing, goosed and fueled by the Fed in the way of zero interest rates. Investors demand return - they need return, so they sought out risk assets in a way very similar to the bubble we're trying to recover from - buying across asset classes in a manner I thought was reckless. When you buy because you HAVE to be a part of the party, you have a quick trigger on the way out - you don't want to be the last one holding the hot potato. Throw in a dose of pure economic disaster and contagion brewing in Europe, and you have all the ingredients for the perfect storm. I use the term Ponzi scheme a lot on this blog, and markets designed to go higher based on the need for more buyers participating rather than fundamental improvements are also destined to crash hard when the buyers disappear. On Thursday May 6th, the buyers disappeared and the sellers wanted out. To summarize - it wouldn't be hard to institute reasonable individual stock trading curbs to slow down markets a bit in times of extreme stress. It would also be a noble goal to try to continue to educate retail investors who don't know what they are doing, so that they can avoid trades that result differently than they had intended. I think trying to legislate away market movements is impossible, though, and that minimal intervention is needed: after all, this crash was a long time in the making. There's a saying: stocks take the stairs up, and the elevator down... Complete Story »
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| Technically Precious with Merv Posted: 08 May 2010 05:57 PM PDT For week ending 07 May 2010 The saying "looks too good to be true" just seems to fit the latest gold activity. I like the action but something just doesn't jive. Maybe it's that (lack of) momentum (strength) behind the recent stock price action. Love it while it's there but always be on guard. GOLD LONG TERM All we need is a quick reference to the point and figure action. It remains quite bullish and everything said last week still holds. Gold continues on its way towards my long term projection of $1600, with a couple of lower projections along the way. As for where we are with the normal indicators, well they are all positive. The price of gold remains above its positive sloping long term moving average line. The momentum indicator remains in its positive zone above its positive sloping trigger line. The volume indicator continues to make new all time highs and remains above its positive trigger line. Nothing controversial here, the long term ...
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| European Bank Risk Soars to Record High Posted: 08 May 2010 05:57 PM PDT Gold didn't do a lot for most of Friday... spending most of it's time within a few dollars of $1,200 spot. The big sell-off that I was anticipating with the release of the jobs report never materialized... and I'm certainly happy about that. There was a bit of a rally during the New York lunch hour that ended at 1:00 p.m. Eastern time... and gold basically traded sideways from that point until the close of trading at 5:15 p.m. Eastern time. Gold's low and high for the day both occurred during New York trading hours... and were $1,191.70 and $1,215.20 spot. Gold had it's highest weekly close in history this past week. Like gold, silver didn't do a lot until the New York lunch hour [12:15 p.m. to be precise]... and then away it ran to the upside. This rally also lasted until 1:00 p.m. Eastern... before either the buyer disappeared... or it was hammered flat by some not-for-profit seller. But from its New York low of $17.46 spot, to it's New York high of $18.69 spot, silver ga...
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| Moody's, Berkshire and The Sec Posted: 08 May 2010 05:56 PM PDT Market Ticker - Karl Denninger View original article May 08, 2010 04:08 PM Moody's (NYSE:MCO) revealed that it received a Wells Notice from the SEC in a filing Friday. That's not all that unusual. What's unusual is that it received the Wells Notice in March. [INDENT]In July 2008, Moody's acknowledged that it had an error in the way it rated constant proportion debt obligations, or CPDOs, that would have lowered AAA ratings given to the 11 CPDOs to AA territory--or a reduction of one to three notches. But this didn't take into account "qualitative factors" that Moody's committees also consider in the firm's ratings. Moody's found that some members of its CPDO monitoring committee in Europe considered factors other than credit--namely whether changing the rating would be embarrassing to Moody's or affect another market participant. [/INDENT]Ok, that looks material. So why disclose it now, when the notice was received in March? Well, let's see - does it take a couple of mont...
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| Posted: 08 May 2010 05:56 PM PDT View the original post at jsmineset.com... May 08, 2010 11:19 AM Greetings Jim, The powerful rally following the long-term breakout in early April continues to gain strength and the Gold Currency Index closed at a fresh all-time high for a second straight week. Technical indicators are bullish overall on the weekly chart, suggesting that this move can certainly go much higher. Is there any doubt that gold is now the currency of choice around the world? Of course, anyone who has been watching the secular bull market in gold over the past nine years has known this for a while, but it looks like conventional wisdom is finally starting to understand what is happening as well. Best, CIGA Erik Prometheus Market Insight [URL]http://www.prometheusmi.com[/URL] ...
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| Posted: 08 May 2010 05:56 PM PDT Market Ticker - Karl Denninger View original article May 08, 2010 06:38 AM You gotta love it. Top search terms Thursday on Yahoo; we were #2. There's nothing like being given a free plug on CNBC to warm the cockles of your heart. Watch the full clip here: And yes, we did have a record day Thursday for both The Market Ticker ® and Tickerforum ™. Both recorded user traffic volumes ridiculously beyond normal levels and in fact well-beyond the levels seen during the crash of 2008 and early 2009. The Market Ticker ® recorded some quite-obscene numbers, with a three day surge running more than 50% ahead of normal. Friday recorded a one-day all-time high of more than 18.6GB of data transferred across more than 2.3 million "hits", eclipsing even Thursday's levels. (Thanks CNBC!) Tickerforum recorded more than 5GB of data transferred on Thursday, with a huge part of that happening during the meltdown itsel...
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| Americans Have Been Bailing Out Foreign Banks for Years ... And We're Getting Ready To Do It Again Posted: 08 May 2010 05:26 PM PDT
As the Wall Street Journal points out, the Federal Reserve might open up its "swap lines" again to bail out the Europeans:
As the BBC's Robert Peston writes:
See this for more information on swap lines. Indeed, the Federal Reserve has been helping to bail out foreign central banks and private banks for years. For example, $40 billion in bailout money given to AIG went to foreign banks. Indeed, even AIG's former chief said that the government used AIG "to funnel money to other Institutions, including foreign banks". As the Telegraph wrote in September 2008:
Congressman Grayson said that the Fed secretly "stuffed" half a trillion dollars in foreign pockets.
Of course, even much of the bailout money which went to American banks ended up being shuttled abroad. As I wrote in March 2009:
So not only are Americans bailing out our own too big to fail banks, but we're bailing out foreign mega-banks as well. Even though bailing out Europe might make sense if America was flush with cash, things are different now. As Congressmen Kucinich and Filner wrote last June:
In addition, the U.S. is - of course - also contributing tens of billions of dollars towards the Greek bailout through its contributions to the International Monetary Fund. Some allege that the U.S. will secretly help bailout of all of Europe. See this and this.
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| Posted: 08 May 2010 02:18 PM PDT
GLD – on buy signal. SLV – on sell signal. GDX – on buy signal. XGD.TO – on buy signal Summary Long term – on major buy signal. Short term – on mixed signals. We continue to hold our core positions, but our recent accumulations were stopped out at breakeven.
Disclosure We do not offer predictions or forecasts for the markets. What you see here is our simple trading model which provides us the signals and set ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector.
End of update
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| NY Post: Feds Launch Criminal and Civil Probes Into JP Morgan’s Silver Trades Posted: 08 May 2010 12:49 PM PDT
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| Mark Thornton on Lincoln's Folly, the Civil War and the Impact of the Business Cycle Posted: 08 May 2010 12:00 PM PDT The Daily Bell is pleased to present an exclusive interview with Mark Thornton. Thornton is Senior Fellow at the Ludwig von Mises Institute. He serves as the Book Review Editor of the Quarterly Journal of Austrian Economics and as a member of the Editorial Board of the Journal of Libertarian Studies. He has served as the editor of the Austrian Economics Newsletter and as a member of the graduate faculties of Auburn University and Columbus State University.
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| Technically Precious with Merv Week Ending 07 May 2010 Posted: 08 May 2010 11:55 AM PDT All we need is a quick reference to the point and figure action. It remains quite bullish and everything said last week still holds. Gold continues on its way towards my long term projection of $1600, with a couple of ...
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| Posted: 08 May 2010 11:24 AM PDT The Kondratiev cycle is a 50-60 year cycle in prices, interest rates and other economic variables. It was noted as early as 1847 in an article in the British Railway Journal by Dr. Hyde Clark, but it was N. D. Kondratiev who first ...
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| When Silver Explodes Above $100/oz, It Will Never Return to Current, Absurd Price Level Posted: 08 May 2010 10:42 AM PDT (snippet) When it is no longer regarded as "inferior" jewelry, at that point supply/demand fundamentals become more normal: a rising price discourages demand while a falling price increases it. Thus after silver is propelled well above $100/oz, silver jewelry becomes a "price support mechanism", where any drop in the silver price spurs new demand. What these dynamic fundamentals represent, when viewed in aggregate terms is the following picture. Once the silver market "blows up", due to the extreme/disconnect between supply and demand (and rampant fraudwith respect to inventories), the price of silver will go straight up. Indeed, it can be expected to rise from five times to ten times current prices with little to no effect on demand. This is a demand "picture" which is unprecedented in the history of commodities. Then, once the price of silver reaches some new price-plateau (at some three- or four-digit number), new fundamentals will evolve (specifically with respect to silver as jewelry) which will serve to keep silver at an elevated price - and not suffer some sickening collapse, as would normally be expected with a commodity which had "spiked" in this manner. To keep this series to a minimal length, I have been forced to briefly summarize a large number of fundamentals which (as I have stressed) are essentially unparalleled in the history of commodity markets. This means that the reaction which will take place in the silver market when rampant fraud and depleted inventories are exposed will also be unlike anything we have ever witnessed before in our personal experience. And every day that silver remains so grossly under-priced, all of these fundamentals simply get stronger. As a precious metals commentator, I would never discourage investors from adding to their gold-holdings. For many different reasons, gold also remains under-priced - and as the perfect "monetary" metal, all investors should have some gold holdings in their portfolio. However, at Bullion Bulls Canada, we have been first-and-foremost "silver bulls". Today, silver is one of only two forms of "good money" (along with gold) - at a time in history when all the "bad money" (i.e. un-backed "fiat currencies") is in grave danger of plunging to zero. However, even if silver had never been used as "money", or even if there was not a great need for "good money" today, the merits of silver in terms of basic supply/demand fundamentals represent an unprecedented investment opportunity. While those investors who have been accumulating silver for many years may curse the continued market-rigging of the bullion-banks, for newer investors, the nefarious deeds of these miscreants can be thought of as "keeping the train at the station". Today, investors still have one, last opportunity to buy silver at (literally) "once in a lifetime" prices. When silver explodes above $100/oz, it will never return to current, absurd price levels. More Here..
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| Get Ready for the European Double Dip? Posted: 08 May 2010 10:04 AM PDT
Citigroup is also bearish, predicting that fears of sovereign debt contagion over Greece could trigger a near-term correction of up to 20%. They said that while there have been financial crises with international implications in the recent past -- Northern Europe in 1992, Southeast Asia and South Korea in 1997 -- the Greek crisis is "graver than these were." The worst crisis to befall the euro area has led economists at Societe Generale SA and Royal Bank of Scotland Group Plc to suggest the ECB should consider the “nuclear option” of buying government bonds to restore confidence in markets, support banks and lower borrowing costs: My thoughts are that the ECB is already behind the curve, allowing speculators to attack sovereign debt of fiscally vulnerable European nations. At this juncture of the crisis, there are only two choices: 1) do nothing and let the world sink into a deflationary hellhole or 2) do anything it takes to shore up the global financial system and look to restructure debt as the world economic recovery gains traction. I believe the Fed and the ECB will opt for the second choice. There will be protests, some people will worry about inflation, but again, when confronted with the choice between two evils, central bankers will opt for reflation-inflation over debt deflation. Take the time to watch Charlie Rose's interviews on the Greek crisis and then watch the Bloomberg interviews with Rod Smyth, chief investment strategist at Riverfront Investment Group and John Herrmann, a senior strategist at State Street Global Markets.
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| International Forecaster May 2010 (#3) – Gold, Silver, Economy + More Posted: 08 May 2010 07:51 AM PDT By Bob Chapman, The International Forecaster US MARKETS It was 7 years ago we said Fannie Mae and Freddie Mac were bankrupt. Most everyone within the beltway knew it, but no one would say anything about it. This as it now turns out they were the poster companies, which led to sovereign debt problems, but also showed that they were involved in massive fraud over several years and many in Washington knew it. Earnings were fabricated in order to create conditions, so that the officers could collect millions of dollars in bonuses. Part of this scam was engineered by Goldman Sachs, which pushed more than $100 million in earnings into future years. Earnings were structured so that they justified larger payouts for executives. These two GSE's were later joined with Ginnie Mae and FHA, not for fraud as far as we know, but in making and insuring loans, that were not worth the paper they were written on. They were the entities, and they still are, that were at the heart of the mortgage crisis. They were responsible for the distortions in the housing market as essentially the lenders of last resort. Remember, everyone had to have a house whether they qualified for it or not. We should also add that the Fed created and controlled the housing boom, aided and abetted by these GSE's and, of course, the lenders and raters. That said, it could have never happened and is continuing to happen with key assistance from these four lenders of last resort. Over a six-year period they arranged for mortgage credit to double; mis-pricing of finance never entered their minds. What in part the GSE's were responsible for was the over liquidation of the mortgage market, that in turn led to distortion that came to be known as collateralized debt obligations, asset backed securities, ABS, and MBS, mortgage backed securities. They were sold by the likes of Goldman Sachs, JPMorgan Chase, Citigroup and others, who arranged with the raters S&P, Moody's and Fitch to have bonds rated AAA that in fact were junk, BBB. In a low interest rate environment, choosing yield, professional investors gobbled them up supposedly after doing their due diligence, which obviously never occurred. All those lawyers and no legal opinions. It seemed impossible and it was. They bought trillions of dollars worth. We said, at the time, this is impossible. Could it be the Fed said, we want you to buy this paper and if there is a problem, we have you covered? This naturally led to more home buying and more CDOs, ABS and MBS, which let the GSE's off the hook in part at least. We would guess the Fed was behind this in order to transfer some of the risk from the GSE's to institutional investors. The result of all this was a giant bubble, which is being and has been re-inflated over the past couple of years. The reasons in government are obvious. Just do not let it collapse on my watch. This is why the crisis isn't over and why it won't be over for at least two more years. Then for how many years will it bump along the bottom? Outrageous monetary policy by the FOMC and Alan Greenspan led to ever more profits in the banking system and on Wall Street. In the end the lifeline was the GSE's and still is. Banking and Wall Street, as we all well know, expedited the distribution of these toxic assets. The problems created by this cabal in their quest for extraordinary profits are still with us. As we look to the future we see more bubbles from that era still to be dealt with and that is sovereign debt. For 19 nations that problem is acute. They are on the edge of insolvency. Iceland has led the pack and today the visible are Greece, Portugal, Ireland, Spain and Italy, all in different stages of collapse. More will soon follow reaching a crescendo next year. The contagion will be complete as bad debt stretches around the world affecting debt and credit everywhere. No one will escape it – it will be just a matter of degrees. We are embarking into a crisis of confidence in governments. Even though Americans do not understand what is wrong with monetary and fiscal policies, they believe their own government is untrustworthy. Some 82% and 79% in two polls just said so. The public obviously sees something is wrong that it quite doesn't understand. The professionals who should understand are looking the other way hoping it will just go away. Compounding these debt problems we have banking and Wall Street running Washington in an ongoing criminal enterprise, which is being splashed all over the media. Something that few have talked about is the failure of Goldman Sachs and the event that could cause the collapse of the derivative markets. The system is fragile, especially since it has been kept alive for seven years by massive amounts of money and credit being injected into the system by the Fed. This is nothing new – it has been going on for a long time. It is just now being exposed. How can you hope the system will function when you have unregulated derivatives, hedge funds that are unregulated, black box front running and naked shorting? That is massive rules violations and the SEC and CFTC do absolutely nothing about it of real import. As time passes the Fed will have to again increase liquidity, not just to banks that keep it on deposit at the Fed, in a sweetheart deal, but to small businesses and individuals. If that doesn't happen the system will be sucked under by the undertow of deflation. Wall Street doesn't care about the state of the systems – they want to make money anyway they can – legal or illegal, as the public has found out much to their chagrin. Do not forget more money is made by professionals on the short side than on the long side. What is going on concerning sovereign debt is eventually going to bring the world financial system down. It did not just happen that way; it was planned that way. "The annual operating shortfall is running between $4 and $5 trillion; not $500 billion as we saw before the crisis or the $1.4 trillion that they announced for fiscal 2009. Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit." John Williams The latest Greek tragedy continues to leave carnage in its wake. Some 30% of the intended Greek bailout financing will come from the IMF, of which US taxpayers will pay for 40%. This has been done to subsidize European countries and banks, which are holding Greek bonds. A deal obviously worked out in some back room by fellow Illuminists. Needless to say, American's should be outraged. The Greek populace in general probably has little intention of paying back these loans, who can blame them. The politicians and the bankers lied to them, telling them things were just fine and they were not just fine. No one told them successive governments and Goldman Sachs were cooking the books. We do see one thing in the future and that is that the Illuminists are losing their grip on total control. The information being disbursed over the Internet and talk radio is exposing more and more of what they are up too. At least at this time things are going very badly for the elitists, especially in Greece. These are the type of things that led up to the French Revolution in 1789, during which some 300,000 elitists lost their heads. We have mentioned these similarities a number of times, particularly on the radio. Then as now the same type of elitists ran things. Then it was a corrupt aristocracy – today it is those who believe they are the masters of the universe, and plan to give us world government. We are quite sure that the end result this time worldwide will be far more extensive. Today you can run but you cannot hide. People today for the most part do not know that there is a ruling elite and when you do expose this reality 95% reject the concept and slip into denial. We have been exposing these people for more than 50 years, so we know the difficulty of making people understand the facts of who really is in charge. These predators have been with us for over one thousand years trying to bring us their version of what is good for us. In this depraved process they have financed and equipt almost every war and conflict during that long period. Today it is control and the elimination of useless eaters. We can guarantee you one thing and that is if Americans are not successful using the ballot box and other legal avenues to retrieve their country and their freedom, what will take place will make the French Revolution look like a warm up that will last for years, as everyone of these monsters are brought to justice. Leadership not under elitist control for the most part does not know what is really going on. Most are shallow and do not understand real history. They only know the same dogma that has bee presented to them by the opposition. Yes, we have a Tea Party, an outward manifestation of rejection of our current system. The movement is noble and well intentioned, but they still do not understand, or are willing to accept, like most newsletter writers, that there is a cabal behind the scenes pulling all the strings. Many in government, banking and on Wall Street know what is going on, but they are terrified to speak out. They do not want to be thought ill of or perhaps lose their jobs. Those in power realize this, but they also know desperation brings revolution, something we may be seeing in the streets of Athens as we write. If you push the public far enough you will get a reaction, which you not going to like. Keep that in mind elitists, because if you do not attempt to reverse what you have created, it will destroy you. On a more mundane note, but certainly part of the mosaic we face, it has become quite evident that money needed to finance huge public debt is becoming increasingly difficult to find, an event we predicted some time ago. The BIS, Bank for International Settlements, the banker's bank, that really is top control on world monetary matters and the IMF have also been telling us that for some time. As an example, the US will pay $20 billion to bail Greece out, if that ever really happens. That is their contribution via the IMF. The big question is where will the money come from to bail out the other 18 countries on the edge of the financial abyss, which includes the US and the UK. Greece is an early warning that the entire global financial system is going to collapse. The elitists got it all wrong again. The collapse was to be coordinated and well tuned to be harmonized and executed simultaneously at some later date. The citizens of Greece have turned this upside down, just as French citizens did at the Bastille. The Greeks are saying we have had enough and won't take it anymore. All sovereign debt is essentially unpayable. Debt has swallowed up the world. Even if the system continues to function the only way debt can be paid on a short or intermediate term basis is to arbitrarily create more money and credit out of thin air, the result of which will be hyperinflation, a lower stock market, higher interest rates and lower bond prices and higher gold and silver prices. These coming events are an absolute lock. All bets are off if we plunge directly into a deflationary depression, although the above results will be the same. It is just the path to failure will have changed. Many more problems are on the way the US and UK are leading the pack. Governments worldwide will have to raise $4.5 trillion in 2010 of which the US will raise just about $2.2 trillion or 45% during a period when these requirements exceed available funds. In England over the last few months the Bank of England has bought 70% of Treasuries and in the US the Fed continues to buy 80% by having others front the orders for them. Worse yet the UK could end up with a "Hung Parliament." When that happened in the mid-1970s the IMF had to be called in. England could very well become the next Greece. The hung parliament will bring lower sterling, unless the liberals and the conservatives can form a coalition, which is certainly possible. Even with a coalition that could govern the disastrous debt problems are not going to go away anytime soon and the UK will follow in the footsteps of Greece. This is going to be a long hot summer for England. Sterling will trend lower and budget problems will worsen. US financing needs dwarfs all others. There is a good chance the demand could cause an explosion in the debt market, especially in the US Treasury market. This would cripple the financial system and cause many bankruptcies. As well, it is not impossible for the Fed to collapse under worthless assets. A 2/3's devaluation, which we expect, could easily accomplish that. No matter which way you cut in, we are in for big trouble. April average hourly earnings were unchanged and weekly hours worked were 34.1 hours. March consumer credit rose $1.95 billion versus a fall of $6.21 billion in February. The cost of protecting US corporate debt with credit default swaps rose 137 bps from 128 on Thursday. The bank index closed at 212 and 25 banks closed at 223. Portugal and Spanish banks hit new highs, as did England. Almost 40 million Americans are on food stamps, or one in three citizens. – This was a section from the most recent issue of the International Forecaster. You can read the full 35 page issue by using the information below to subscribe. THE INTERNATIONAL FORECASTER P. O. Box 510518, Punta Gorda, FL 33951-0518 Published and Edited by: Bob Chapman CHECK OUT OUR WEBSITE 1-YEAR $159.95 U.S. Funds US AND CANADIAN SUBSCRIBERS: Make check payable to Robert Chapman (NOTInternational Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. 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| Posted: 08 May 2010 07:21 AM PDT By Sol Palha, Tactical Investor
Even when the experts all agree, they may well be mistaken.
Everybody loves to use the word 'expert' all the time to claim they know something extra or have knowledge of the inner workings in a specific field or area. Repeat the word expert slowly and then spell it like it sounds and viola you get EX SPURT, which basically means that this expert is nothing but a spurt that never was, in other words, they are finished even before they have even begun. Isn't it strange that most so called financial experts fall into the EX SPURT category? We use words to secretly define what we know to be true but refuse to believe or see with our open eyes. To live in an illusion is far easier than to step out and deal with reality. It's said that reality bites, but then we could say illusions swallow. In reality, there is no such thing as an expert, because who are you measuring yourself against. Anyone can be expert if they measure themselves against the ignorant and blind. There are only advanced market students or advanced life students. We can never stop learning for when we do, senility is usually very close at hand.
The public do not know enough to be experts, but know enough to decide between them. More articles from the Tactical Investor….
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| Ron Paul: There’s Anger… There’s Going to be Riots in the Streets Posted: 08 May 2010 07:21 AM PDT Rep. Ron Paul (R-TX) was on Fox News yesterday, discussing Greece and describing how the financial crisis has become a currency crisis… which is much worse. He sees an attack on the dollar in terms of gold, and has no doubt that the currency crisis is a worldwide problem. Referring to whether or not Greece-like riots could take place in the US he says: "Absolutely, there's going to be anger. There's going to be riots in the streets as well. But this is all a consequence of the fact of why and how government could spend like this. It's because they don't have sound money. "When we run up deficits, we tax, but never enough. We can't tax, it would ruin the economy. Then we borrow, and we get away with that for a long time. But, we rely on printing presses from the Federal Reserve to create money and that's where the problem is [...] we can't have fake money, this is counterfeit." Ron Paul: There's Anger… There's Going to be Riots in the Streets originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." Check out our new special report Investing in Offshore Oil More articles from The Daily Reckoning….
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| Gold Investing: Keep On Keeping On Posted: 08 May 2010 07:20 AM PDT Front and center this morning is all the hootin' and hollerin' about the stock market move yesterday… At one point it was down 1,000 points… That's right, I did not let my "fat fingers" mess that up… However, someone on Wall Street apparently did, as they meant to enter a trade to sell "millions" of shares of Procter & Gamble, but entered "Billions"… That's Billions with a capital "B", as Ronald Reagan used to say! Upon discovering the "fat fingers" error order was restored… However, the problem here is that stocks were down BIG TIME before the "fat fingers" error… It was a bad day a red rock for stocks. And it was a bad day at red rock for the euro (EUR), and all the other currencies that it dragged through the 1,000 miles of broken glass… There were some exceptions, as Japanese yen (JPY) and Swiss francs (CHF) rallied along with the dollar… But the BIG WINNER on the day was gold… The shiny metal kicked sand in the face of the dollar all day and night, climbing back to $1,200 an ounce… Gold is selling a bit this morning, but is still above $1,200! I have to wonder where the "gold price manipulators" were yesterday… Did they give up the ship? Did they throw in the towel, and go home with their bat and ball? I doubt it… You see, the pattern I notice, is this… They do not manipulate every day… And on a day like yesterday, it would have been suicide to step in front of that runaway train called gold. The markets went severely into this funk of selling yesterday after the European Central Bank (ECB) failed to calm the markets… The ECB indicated it was taking no further action to stop the Greek debt crisis from spreading to weaker Eurozone financial markets. ECB President Jean-Claude Trichet said the central bank didn't discuss what the market calls the "nuclear option," a procedure that would involve the purchase of government bonds in the secondary market. Now, don't get me wrong here… While the markets want the ECB to jump through hoops and do anything and every thing to calm the markets, they have stuck to their guns, in hopes that the markets finally realize that a central bank can't be all things to all people… And to me… That's the right thing to do! But, I worry about the ECB, and this decision, and wonder how long their finger in the dike is going to hold back the wave of water that will cause them to head to higher ground… If the markets don't back off soon, The ECB is going to have egg all over their collective faces… And that's not a good feeling, as I've been there, done that, and bought the T-shirt! OK… Well… As I was packing up and getting ready to leave for the day yesterday, I told the folks on the desk that it looked like the euro would lose the 1.26 figure, as it was falling like a rock off a cliff… But… The "oversold" levels must have kicked in, and as stocks began to recover from the "fat finger" error, the euro began to rally… And this was quite the rally, as it moved from the low 1.26 handle to 1.2788 in late trading, overnight trading and European trading… Not in one session did we see the rally stall, or get reversed… Now… Does this mean that the all-clear signal has sounded for the euro? Not hardly! The euro isn't even close to getting out of the woods, folks… Should it be? Well in my opinion, the selling has been far too severe considering the fundamentals… Just this week, the euro had lost 4.2% before the turnaround yesterday afternoon… But… My opinion is… Well, it's my opinion, and doesn't move markets… Not one iota! While stocks and euros were falling yesterday I wondered to myself… "Is this a 'race to the bottom'?" I certainly hope not! So… We're a good way toward the end here, and I haven't talked about the Big Kahuna this morning… The Jobs Jamboree! Yes, the first Friday of each month brings us the Jobs Jamboree, which the forecasters say we'll see an increase of jobs created by 190K. Remember, what I told you yesterday… About 125K are government census workers… So, while 70K jobs created is better than the -500K jobs lost each month a year ago, I'm sorry to say that it's not enough to feed an economy that wants to be strong. When things in the Jobs Jamboree get all crazy, like now, I revert to my original thoughts on the subject, which is to ignore the jobs created, for there is not one indication in the report, what kind of jobs were created… Instead, I prefer to stick with inflation indicators of Average Earnings, and Average Weekly Hours. There's still not a lot of wage inflation going on, folks… The workers that have jobs have their heads down and are not thinking of raises… But if you're asking for raises, it's no surprise they're giving none away. Speaking of working harder, longer hours… The stupid productivity data confirmed that we are doing just that! And… The Weekly Initial Jobless Claims were just about bang on the forecast of 440,000 printing at 444,000… The Continuing Claims continue to be a real problem, folks… People are not going back to work, as fast, as the media and government would have you believe! In Canada, jobs are recovering too… The latest jobs data showed more jobs added than forecast last month… April's increase was 108,700 new jobs, versus March's increase of just 17,900. (And the markets thought that number was good, then!) Add this data to the roster of reasons that the Bank of Canada should be the first G-7 member country to raise rates! And, oh! The Canadian dollar/loonie (CAD) loved the data, and the fact that the euro recovered a bit to come back strong on the day/night… The poor pound sterling (GBP)… It has not been allowed to come out and play with the euro and other currencies rallying overnight… You see the UK elections came out just like I said they would… A hung parliament… And when there are questions about country leadership, that country's currency gets deep-sixed… In a heartbeat! Another currency that's just like a trip through the Wild West, the Brazilian real (BRL) has really demonstrated the "Emerging Markets Shuffle" this week… After climbing to 1.7260 on Monday, it has fallen to 1.8950 before recovering along with the euro to 1.8550 this morning. I think what we saw was the usual selling of emerging markets whenever there are problems in the world, and… Probably the Brazilian Central Bank looking at this sell-off as an opportunity to weaken the real even further, and most likely added their own sells, thus explaining the HUGE loss of the real this week. But you know what? The real has been a real trooper the past couple of years, and has, in the past, come back strong, whenever it sees these wild swings… So, if that pattern were to hold true, one would think that these levels would be bargain basement levels… But, if there's more selling of the euro, things could even get rougher for the real going forward… But, think about this before you pick up the phone and put in an order in to sell your reals… The real pays you a "risk premium" in interest… You can't get interest paid to you any higher than the real pays anywhere around the world… I sure would like to see the markets calm down a bit today going into the weekend… I guess the Jobs Jamboree will have a lot to say about that! Then there was this… You know… Yesterday's stock market sell-off may have been attributed to the "fat fingers" error… But think about this before you let the selling slide… Stocks were already down big time, so there was, if you will, a 3-1 count with the stocks pitching to Albert Pujols… Chances are the outcome isn't going to be good for the pitcher… And so it was with stocks… No… They wouldn't have sold off 1,000 points, but the fact remains they were already down, BIG, and… Their fundamentals are awful… To recap… The BIG Sell off of stocks was caused by a "fat fingers" error yesterday, and as stock recovered, so did the euro, and the other currencies so affected by the euro's decline… Today is a Jobs Jamboree Friday… Canada's Jobs data was quite strong at 108,700 jobs added in April. And the European Central Bank left the markets hanging out on a line yesterday, as they failed (by markets' requests) to calm the markets with some kind of announcement that they would jump through hoops to save Greece. Chuck Butler Gold Investing: Keep On Keeping On originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." Check out our new special report Investing in Offshore Oil More articles from The Daily Reckoning….
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| U.S. Market-fraud Enters New Era Posted: 08 May 2010 07:20 AM PDT By Jeff Nielson, Bullion Bulls Canada The same equity markets which have a "team" permanently dedicated to manipulating equity prices higher began a new era of fraud on May 6, 2010. When the mindless trading-algorithms which now control most U.S. equities trading all suddenly flipped to "sell", U.S. equity markets had their most violent plunge in a quarter century.
What was the response of the U.S. government, and their pretend-regulators who operate their markets? They are canceling a vast and (as yet) undetermined number of trades. Essentially they are giving market insiders a "do-over" – presumably because Wall Street insiders were also caught by surprise, and thus unable to capitalize on whipsawing investors. In the permanently-pumped U.S. markets, those markets are now only allowed to fall if such a drop is desired by the Wall Street banksters who give U.S. 'regulators' their marching orders.
Supposedly, some "computer error" was the culprit for this crash. As is typical of compulsive liars, there is a kernel of truth buried in this massive lie. The crash was caused by computers, but there were no "errors" involved. U.S. equity markets have been pumped up to absurdly fraudulent levels – which are epitomized by the share prices of the Wall Street financial crime syndicate.
Those banks are hopelessly insolvent, as they continue to hide countless trillions in losses, courtesy of the mark-to-fantasy accounting rules which were enacted to save them from having to declare immediate bankruptcy. Meanwhile, their decade-long crime-spree is resulting in the beginnings of a tidal wave of litigation against the banksters, which will totally obliterate the Wall Street Oligarchs.
Home-builders are grossly inflated, as the "statistics" from the U.S. housing market are only surpassed by U.S. jobs-reports in their level of fraud. The next collapse of the U.S. housing sector is already underway.
Pretending that consumer spending is rising (through grossly understating inflation) has resulted in U.S. retailers also sitting at grossly inflated valuations. And the U.S. economy, as a whole, is poised for a more vicious collapse than during 2008, as "stimulus" is exhausted, and state and local governments prepare for the most-massive concentration of public sector lay-offs in U.S. history. More articles from Bullion Bulls Canada….
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| Posted: 08 May 2010 07:20 AM PDT Bullion Vault IT HAD a huge housing boom, and is now dealing with the fallout, writes Martin Hutchinson, contributing editor at Money Morning. It has a left-of-center government and a big budget deficit, but relatively low debt in relation to its gross domestic product (GDP). And it has a worrisome current account deficit. I'm talking, of course, about Spain, which investors clearly fear will be the next domino to fall as a result of the Greek debt contagion. I disagree. The Spain debt outlook is nothing like that of its Greek counterpart. When you get right down to it, Spain looks more like the United States than it does the other European "PIGS" (Portugal, Ireland, Greece and Spain, or "PIIGS," if you wish to include Italy). It's because of those U.S. similarities that Spain is fairly unlikely to share the fate of its Mediterranean neighbor, Greece, which is essentially insolvent. Indeed, in one respect, Spain's position is actually much better than its US counterpart. We'll see why shortly. Like Greece, Spain suffered from a reviled dictatorship that exited the scene in the 1974-1975 time frame. The dictatorship in Greece ended in 1974 with the collapse of the "Regime of the Colonels", while the curtain came down on Spain's autocracy in December 1975 with the death of General Francisco Franco. However, both the tenure of the dictatorships and the two countries' reactions to the collapse of their respective regimes were quite different. Greece's dictatorship lasted only seven years, was never stable, and occupied itself mostly with corruption, military expenditure and saber rattling in Cyprus. Franco, on the other hand, after winning a truly devastating civil war in 1939, devoted himself over his remaining 36 years to developing his country's economy on a more or less free-market basis, with low public spending, while maintaining an international posture of caution and neutrality. With the two countries traveling down such divergent paths, it's no surprise that they experienced very different outcomes. By 1975, Greece was a total basket case, with only its offshore (and non-taxpaying) shipping sector flourishing, whereas Spain was a rapidly developing tourist magnet, with a substantial industrial economy behind it. After 1975, the two countries continued to develop very differently. Greece – which had exiled its king, Constantine II – elected the leftist socialist Andreas Papandreou and in 1981 joined the European Union (EU), where it became a master in the art of subsidy corruption: After all, Greece was the union's poorest country at that time. Spain, on the other hand, kept King Juan Carlos, who thwarted a coup in 1981, elected a moderate social democrat government under Felipe Gonzalez followed by a very good center-right one under Jose Maria Aznar. The nation also developed the best luxury tourism sector in Europe, together with one of its best business schools in the University of Navarra's IESE. Today, while both countries have similar per-capita GDPs – $33,700 for Spain and $32,100 for Greece – Spain is ranked 32nd on Transparency International's Corruption Perceptions Index, while Greece is ranked 71st, below much poorer countries like Bulgaria and Ghana. Spain's debt load – at about 55% of GDP – is less than half of its Greek counterpart. Clearly, Greece's GDP per capita needs to be sharply deflated for the country to regain competitiveness; it's much less clear that Spain needs to do the same. In addition to a budget deficit of 11.5% of GDP in 2010…which is very similar to that of the United States…as well as a banking and real estate mess (though the largest bank, Banco Santander is pretty solid), and its relatively low debt, Spain (also like its US counterpart) also has itself a left-leaning government with a proclivity for overspending. Prime Minister Jose Luis Rodriguez Zapatero was unexpectedly elected on an anti-US platform after a terrorist attack in 2004, and was re-elected in 2008, both times by small majorities. Zapatero is undoubtedly responsible for much, though not all, of Spain's budget problems; he undertook two economically damaging "stimulus" packages in 2008 and 2009 and has raised public spending from about 38% of GDP when he took office to 46% of GDP today. In fairness to Spain, the big run-up in spending wasn't due to a big run-up in poorly thought out handouts: The country moved enthusiastically – perhaps too much so – into the green-technology sector, to the point where an all-too-familiar boom-and-bust scenario played out. Like the United States, Spain is stuck with its left-leaning administration until 2012 (both have four-year electoral cycles; Spain's is seven months earlier). However, it has one enormous advantage over the United States – a savings ratio (personal savings as a percentage of disposable income) that stood at an extraordinary 24.7% in the 2009 fourth quarter, compared with a mere 2.7% in the latest month here in the United States. Admittedly, Spain's saving is highly cyclical, so the annual average is only about 20%. Nevertheless, the much-higher level of domestic saving suggests Spain should be able to finance its budget deficit domestically much more easily than will the United States. With public debt also lower than in the United States – let alone in Greece – Spain's position is thus fundamentally sounder. It should be relatively easily able to navigate the current storm and ride out the current government's spendthrift tendencies – giving the voters the chance to put a more-fiscally-appropriate government in place in the next election. That being said, investors have to acknowledge that panic can trample logic. Indeed, as U.S. investors learned all too well back in 2008, in a market panic even well-run institutions can get into trouble (not that many of the Wall Street houses of that year were well-run, but a few were). The same is true of countries, and Spain under Prime Minister Zapatero has weak-and-economically damaging leadership, which the voters are stuck with for another two years. Nevertheless, with its debt rating still a very respectable "AA," only the worst storm should cause Spain to take the same kind of crisis-spawned battering that Greece continues to face. Buying Gold? Make it safe, simple and cost-effective by using BullionVault…
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| Posted: 08 May 2010 07:19 AM PDT Greetings Jim, The powerful rally following the long-term breakout in early April continues to gain strength and the Gold Currency Index closed at a fresh all-time high for a second straight week. Technical indicators are bullish overall on the weekly chart, suggesting that this move can certainly go much higher. Is there any doubt that gold is now the currency of choice around the world? Of course, anyone who has been watching the secular bull market in gold over the past nine years has known this for a while, but it looks like conventional wisdom is finally starting to understand what is happening as well. Best, CIGA Erik
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| Bullion & Business Weekend Recap – May 8, 2010 Posted: 08 May 2010 07:19 AM PDT
Other metals tumbled on worries industrial demand would weaken should the European crisis spread and jeopardize a global recovery, although silver followed gold's coattails and rallied nearly $1 on Friday to pair its weekly losses. On those same concerns mostly, crude oil plummeted to near $75 a barrel and suffered its biggest weekly decline in 16 months. European and U.S. stocks fell for a second straight week — again, debt crisis concerns cited as a catalyst. Worse for investors, major U.S. indexes not only fell for the week, but they gave up all of their 2010 gains. (…) © CoinNews.net for Coin News, 2010. |
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| Mother’s Day Commemorative Coin Act Passes House Twice Posted: 08 May 2010 07:19 AM PDT
The passage comes just days before Mother's Day, which is held each year on the second Sunday in May. However, when it comes to whether the bill becomes law, moms and collectors may not want to hold their breadth. Similar legislation has had a history of passing in the House, only to die from inaction on the Senate's part. (…) © CoinNews.net for Coin News, 2010. |
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| Goldman's View On Europe Bailout Plan #42 - "Unlikely To Calm Markets" Posted: 08 May 2010 05:24 AM PDT
We now know that the European Union, as part of its most recent ridiculous idea for a global eurozone bailout, is planning on soon issuing its own bonds and thus becoming a defacto Treasury. How the hell it plans on doing this is simply beyond comprehension, but it certainly involves a lot of "financial innovation"... ergo - enter Goldman Sachs, from whom it would need a ringing endorsement to proceed with its plan. Alas, the just released note from Erik Nielsen is anything but favorable. (and yes title is a ref: Douglas Adams - the EU has the answer, if only they could find the question now).
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| News media notice of metals market manipulation growing, Butler tells King Posted: 08 May 2010 04:52 AM PDT 12:45p ET Saturday, May 8, 2010 Dear Friend of GATA and Gold (and Silver): Silver market analyst Ted Butler, in his weekly interview with Eric King of King World News, reports that last week's plunge in silver was a paper market manipulation, as there was only buying in real metal. Butler adds that there is increasing notice in the mainstream financial media of complaints of precious metals market manipulation. He cites particularly the recent CNBC appearance of Omnis Inc. executive James M. Rickards, in which Rickards noted the confirmation e-mail a Butler newsletter subscriber received from the U.S. Justice Department that J.P. Morgan Chase & Co. is under investigation in connection with silver market manipulation. (See http://www.gata.org/node/8605.) The King World News interview with Butler is seven minutes long and you can find it here: http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Silver Phoenix Resources Inc. [CNSX: SP] has announced a non-brokered private placement offering to raise up to $2 million by issuance of up to 4 million flow-through units at a price of $0.50 per unit. Non-flow-through common shares are being offered on the same terms to interested subscribers. Private Placement Offering for Silver Phoenix Resources Inc. Each flow-through unit consists of one common share in the capital of the corporation (a "flow-through share") and half of one non-flow-through common share purchase warrant (a "warrant"). Each whole warrant shall entitle the holder to acquire one non-flow-through common share in the capital of the corporation (a "warrant share") until 5 p.m. Vancouver time on the date 24 months following the closing date (as defined herein) at a price of $0.70. The proceeds raised from the offering will be used for general exploration and to drill the 100-percent-owned River Jordan Property. This historic property hosts the King Fissure [aka River Jordan] lead, zinc, and silver deposit. Following a comprehensive field program in 1991, a structural re-interpretation of the complex folds hosting the King fissure deposit resulted in a major increase in potential mineralization to 20 million tonnes of 7.5 percent lead, 7.5 percent zinc, and 100 g/t silver [Laird and Clark, 1991]. The estimated tonnage of the light rare earth and niobium-bearing extrusive carbonatite unit is on the order of 33,750,000 tonnes, with no ore grade currently established. This historical estimate predates National Instrument 43-101 legislation. Interested parties can contact: William J. Murray, President and CEO For more information about the River Jordan Property, please visit: http://public.iwork.com/document/?a=p1047687515&d=River_Jordan_Property.... Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Centennial Precious Metals' new booklet, "Pre-1933 Gold Coins: Security, Privacy, and Opportunity in a Time of Economic Uncertainty" by Michael J. Kosares, is available to the firm's current and prospective clientele. Kosares is also the author of the widely read introduction to gold ownership, "The ABCs of Gold Investing -- How to Protect and Build Your Wealth with Gold" (1996, 2004). Free Booklet from Centennial Precious Metals on Pre-1933 Gold Coins You can register for your free hard copy here: http://www.usagold.com/order_booklet.html A printer-friendly version is available here: http://www.usagold.com/publications/pre-1933_gold_coins.pdf Or you can order by telephone by calling Marie Ballard at Centennial Precious Metals at 1-800-869-5115x106.
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| Criminal and civil probes under way into Morgan silver trading Posted: 08 May 2010 03:33 AM PDT 11:25a ET Saturday, May 8, 2010 Dear Friend of GATA and Gold (and Silver): The New York Post tomorrow will report that the U.S. Justice Department has begun a criminal investigation of JPMorgan Chase & Co. in regard to trading in the precious metals markets and that the U.S. Commodity Futures Trading Commission has begun a civil investigation. The forthcoming Post story was disclosed by its reporter, Michael Gray, at his Internet blog last night: http://mgray12.wordpress.com/2010/05/07/feds-probe-jp-morgans-silver-tra... On April 11 Gray reported extensively on GATA's disclosure at the March 25 hearing of the U.S. Commodity Futures Trading Commission that a London silver trader had alerted the CFTC in advance to a silver market manipulation by Morgan Chase traders: CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Corp. Appoints Rob McEwen to Advisory Board Prophecy Resource Corp. (TSX.V: PCY, OTC: PCYRF) is pleased to announce the appointment of Rob McEwen to the company's Advisory Board. McEwen is a leading Canadian mining industry entrepreneur. He is the chairman and CEO of U.S. Gold Corp. and Minera Andes Inc. McEwen was the founder and former chairman and CEO of Goldcorp Inc., whose Red Lake Mine in northwestern Ontario, Canada, is considered to be the richest gold mine in the world. During his tenure at Goldcorp, McEwen transformed the company from a collection of small companies into a mining powerhouse, growing its market capitalization from $50 million to approximately $8 billion. For Prophecy Resource Corp.'s complete statement: http://www.prophecyresource.com/news_2010_mar11b.php > Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Anglo Far-East Bullion Co., the Original Private Bullion Custodian For two decades Anglo Far-East Bullion co. has been providing select international clientele the highest degree of privacy, security, and access to buy, hold, and sell allocated gold and silver bars. -- Allocated gold and silver bars: AFE will not only provide you with the individual bar numbers of the bullion bars you own, but you can also rest safely in the knowledge that each bar is sight-verified by a top Swiss auditor and annually checked off against AFE accounts to ensure that your metal is locked away safely. -- Guaranteed market access and liquidity: AFE buys and sells directly with LBMA-certified metal refineries only. 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| Jim Sinclair: It's All Over. The Fat Lady Has Sung Posted: 08 May 2010 03:24 AM PDT The solution is the problem. To quote Bill Carleton's album, Squeeze the People, "Main Street is in the hands of a Roulette Wheel." He is so correct. The name of the "Roulette Wheel" is Credit Default Swaps. It does not matter what the G-7 or the G-20 does. It does not matter what the IMF, ECB and Fed under a beard do. Mrs. Merkel's foolish political strategy fits right into the equation. CDS are going to take down every major currency, making trillions for the players. It will in time turn on the USA as it is already operating against the financially weaker Illinois and New York debt. The dollar, as it gains ground due to the mirror image of the euro, becomes weaker and weaker due to overvaluation with no fundamental legs. The dollar's time will come. The OTC derivative credit default swap is about to clean the clock of the world. Der Spiegel is right but the debt is there. It will not go away but only grow bigger. The situation is in the cross hairs of the richest people on the planet hell bent on getting richer. That is the message of the Dow dropping 1000 points regardless of how it happened. Nothing the G-7 or G-20 does will stop the predetermined avalanche in the world of fiat currency. Armstrong is right in that when it comes time for the great coming apart it will be akin to the Big Bang. You are either ready now, or there will be no chance of readiness. Right now ready means gold and gold equivalents. The last currencies to be attacked will be the Cando and the Swiss Franc. It is all over. The fat lady has sung. Respectfully, Jim The Mother of All Bubbles Huge National Debts Could Push Euro Zone into Bankruptcy Greece is only the beginning. The world's leading economies have long lived beyond their means, and the financial crisis caused government debt to swell dramatically. Now the bill is coming due, but not all countries will be able to pay it. By SPIEGEL staff. 
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| Surging Libor-OIS And Cross Currency Basis Swaps Indicate Europe's Response Is Too Little Too Late Posted: 08 May 2010 02:07 AM PDT
Even as the immediate factor for the 1000 point drop in the Dow is investigated for the next several months by the SEC, a process which will likely not come to any reasonable market structure regulatory recommendation before the SEC is forced to analyze the next subsequent (and even greater) crash, the one primary fundamental cause for the sell off in stocks this week was the ever deteriorating situation in Europe. As the euro tumbled on Thursday afternoon, which we noted 20 minutes before the stock market crash began in earnest, as implied correlation algos went berserk, and as viewers were witnessing the near-warfare in Athens live, things just got too real for speculators (investors is so 20th century). Various computerized trading platforms merely kicked on (or rather, off) after the initial panic had already set in, and liquidity evaporated, leading to the implosion in the market. And the primary reason for the initial market pessimism early on Thursday was the fact that even as the whole world was listening to Jean-Claude Trichet to say soothing words after the ECB's rate decision, the central bank president once again did not realize the gravity of the situation. And to speculators, long habituated to Bernanke's endorsement of infinite moral hazard and speculative mania, the fact that someone refused to play "ball" and leave open the possibility that failure is still permitted in our day and age was the last straw. Now, 48 hours later, we learn that the rumors, which we reported about the ECB preparing a bailout fund, were indeed true. Our sense is that at this point the ECB's action is "too little, too late" as contagion fear has already crept deep within the fabric of various overt and shadow funding/liquidity mechanisms. Additionally, the world is now convinced that Europe can only deal with problems retroactively, and who knows how big and unfixable the next problem will be: the ECB, which has lost most of its credibility after "inviting" the IMF to do a heavy part of the bailout, is about to become the laughing stock of global central banks. Trichet is seen merely as a powerless bureaucrat, caught between Merkel's electoral struggles and Bernanke's demands for contagion interception and implicit Fed supremacy over Europe. The contagion from the "isolated" Greek fiasco is rapidly spreading. Here are some of the ways in which markets are about to be affected. First, we present Evidence A of how the market reacted on Thursday to the critical (lack of) announcement by Jean-Claude Trichet. The chronological sequence of events culminates with Accenture trading at $0.01 and begins with rolling disappointment that Trichet had not received the "Global Moral Hazard" memo:
To be sure, those conspiratorially minded could say that a primary reason for the Thursday sell-off was to prove to Europe, whose various parliaments were voting on Friday on the Greek bail out package, that the end of the world would surely come if they did not do as the French and German banks demanded... Because as we have repeatedly demonstrated those standing to lose the most from a Greek collapse are merely Europe's incarnation of Wall Street. And as the ECB and the IMF had wasted all of their credibility and "doomsday talk" ammo, a practical demonstration would have served the best purpose. The biggest worry that the ECB has let matters go too far, is that what was considered purely an exercise in sovereign risk, has now spread to financials as well. And will likely not stop there. This makes sense, as the banks are at the nexus between the public (bail out) vertical and the private (shareholder) space. As an aside, if Obama continues on his warpath with Wall Street, banks will very soon become regulated utilities: equity upside will be capped based on what side of the bed the president wakes up on. Until then, increased risk within the financial space will merely bring up PTSD flashbacks to the last quarter of 2008. As BofA shows in the chart below, sovereign risk has become a proxy for financial risk (and vice versa). In this sense what is happening with Greece (and the next much bigger country to be bailed out), is identical to the Bear-> Lehman catastrophic progression, as Zero Hedge has indicated repeatedly.
So now that financials (away from America) and European sovereign risk are congruent, this brings up the question of who is supposed to resolve the escalating crisis in Europe. And unfortunately, the two parties in control are the ECB and the IMF, the two most bureaucratic and ineffectual organizations in our day. It is no surprise that pundits hope that the Fed steps in and takes charge of the European bail out. Yet even the Fed's arms may be tied - unlike in the US, debt monetization will be difficult to pass in a traditionally hawkish ECB, not to mention the political complexity of dealing with one currency union but 20 different bond markets. Whose debt will the ECB monetize? Who will benefit the most? These are all questions that the Fed did not have to worry about. Which means that the Fed could be limited to providing merely FX swap bailout lines (more on this in a second). And that Europe will need vast amount of liquidity imminently is beyond a shadow of a doubt. With Spain forced to pay a recent record 3.5%+ on its auction Thursday, a surge of almost 100 bps in a little over a month, it is only a matter of time before Spain follows Greece and Portugal into the penalty box of public capital markets exclusion. To demonstrate just how massive the check will be if the Greek contagion remains solely within the PIIGS, below we once again present the redemption calendar for 2010 and 2011 in Bills and Bonds for the peripheral countries. In a nutshell, there is over E700 billion in contractual bond redemptions in just the next two years. And this excludes any short-term funding needs by the banks of the PIIGS.
The critical observation here is that merely meeting Europe's funding needs, now that the ECB is increasingly relegated to second-tier status, the IMF's recently expanded to $500 billion New Arrangements to Borrow facility will be insufficient by nearly half to meet liquidity demands for the next 18 months. Let alone any discussion that by the time it becomes clear how unsalvageable the euro and Europe are, the US will be underrated by $100 billion as the one single biggest contributor to the NAB. Yet all this would be irrelevant if, as some permabulls claim, America could simply decouple itself out of the Europe-shaken world and continue pretending that a +34k clear NFP print is really +290k, thus claiming all is well. However, as the very much globalized credit markets have demonstrated over the past week, decoupling is and has always remained a myth. And for those keeping a close finger on the pulse of the credit markets, one needs look no further than Libor, as well as the slightly more arcane cross-currency basis swap. As can be seen below, the TED spread (spread between LIBOR and the 3 month UST), has been aggressively moving wider as LIBOR surges.
If you notice a similarity between the last week's LIBOR widening and the panicked blow up in the interbank lending rate in August 2007, September 2008 and March 2009, you are not alone. As Bank of America points out:
Yet the biggest concern aside from the actual asset value of underlying sovereigns, is the amount of dollar-notional held by European banks, and the currency funding mismatch, manifesting itself in an even more aggressive move in the EURUSD cross currency basis than in LIBOR (for now at least).
What this means in plain English is as follows, again from BofA:
And herein lies the rub: it is always these excessive dollar asset holdings by European banks that force the Fed to come out and bail European institutions which get clobbered with margin calls once the euro plummets. Recall that at the peak of the post-Lehman crisis, in December 2008, the Fed disbursed over $580 billion in liquidity swaps to prevent just the kind of liquidity crunch that LIBOR is indicating could be in store for Europe all over again. And rumors are rife that the Fed is about to launch just these swaps again, if it hasn't already. Surely, Bernanke can not take the risk that left to its own devices, Trichet will only make an even bigger mess out of things. And due to the interconnectedness of credit markets, a liquidity crisis in Europe would promptly take the S&P back to 666, killing the Chairman's incipient debt inflation experiment in its tracks. Which is why we expect that the Fed will likely announce the reintroduction of currency swaps imminently, as the Fed is all too aware of how critical it is to be prepared in advance for another liquidity "risk flaring" episode. Curiously, Bank Of America disagrees that the Fed will go ahead with currency swaps for the following very valid reasons:
Good points, although we have no problem seeing Bernanke override the market any time on threats of Mutual Assured Destruction for bullets 1 and 2, and seeing the facility with which he has invoked 3 in the past it probably would not be an issue either, although we would love to see Alan Grayson's response, who will likely crucify the Chairman if that is the pretext used to bail out Europe... again. The bottom line is that Europe is caught in a corner, in which every subsequent action is now seen as a reactive response to the most recent calamitous incident, and thus not even last night's announcement of a bail out facility will do much for the EURUSD rate. And should the EUR crash to the 1.20 support level, then the Fed will have no option but to institute currency swap lines, which in turn will activate a whole new set of liquidity parameters. Not the least of which will be that the realization that the recovery leg of the fabled V-shaped economic expansion has been a mirage. The only other option for Europe, is outright monetization. We think this will not happen, as that action would be the death knell of the Euro, which would then tumble close to parity, once again forcing the Fed to get involved. If anyone will monetize anything, it will be the Fed, which is so far saving the worst for last. It is likely that the mid-term elections are seen by Bernanke as the Maginot line past which it will still have sufficient time to deflate enough of the dollar to catch the massive CRE refi wave in advance of the 2012 cliff. Yet the clock is ticking - each day that the DXY rises, is another day that makes the trillions in worthless maturities increasingly more difficult to roll, and thus will force all the mark to myth on bank balance sheets to come out in the open on the maturity date. While the clock has now run out for Greece, and most of the euro periphery, its ticking has just gotten that much louder for the United States itself. But not before Europe is forced to make the difficult choice of submitting to Fed authority or face the future on its own, and without its own consolidated currency.
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| Posted: 08 May 2010 12:37 AM PDT
It appears that the markets are in for some action next week. The EU leaders have pledged to put a package of measures on the table for the market to absorb by Sunday evening.
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| Posted: 07 May 2010 11:33 PM PDT
Nothing can curb the endless bullishness and enthusiasm of Joseph Cohen's successor, not even a 1000 point drop in the Dow in 5 minutes, and the realization that markets are nothing than the backdoor opium smoke-filled gambling den of a few mutually front-running algorithms. In the latest Weekly Kickstart, Goldman's David Kostin, tries to fill the Goldman trading axes, and begins with the following: "Fundamentals ignored as US equities gripped by contagion fears; we see 1250 by year-end." Of course, those who have done the opposite of what Kostin has preached (i.e., Goldman Sachs itself) are the only ones outperforming the market: "Our recommended sector weightings have generated -12 bp of alpha YTD. Our overweight recommendations (Energy, Materials, Info Tech) have generated -32 bp of alpha while our underweight positions (Health Care, Consumer Staples, Utilities, Telecom) have generated +20 bp of alpha." We will soon refresh the Goldman "CONviction Buy List" YTD P&L. That one should be fun. In the meantime, enjoy some pretty charts from 200 West. Fundamentals ignored as US equities gripped by contagion fears; we see 1250 by year-end, Goldman Sachs
This posting includes an audio/video/photo media file: Download Now | ||||
| Greece Being Forced to Buy Arms In Exchange for Bailout Says MEP Posted: 07 May 2010 09:42 PM PDT | ||||
| Ellen Brown – Stock Market Collapse: More Goldman Market Rigging? Posted: 07 May 2010 09:28 PM PDT Stacy Summary: The latest from Ellen Brown . . . I will also, later today, be posting our interview with her for this week's On the Edge.
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| The latest Greek tragedy And Sovereign Defaults Pose A Great Threat Posted: 07 May 2010 08:00 PM PDT The latest Greek tragedy continues to leave carnage in its wake, crime compounds the debt problems, Problems everyone knew about nobody did anything about, the Sovereign debt bubble is now upon us, and could bring the world financial system down, a situation like the French Revolution in Greece, food stamps at a record high, unemployment and problems of poverty in the US,
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New York gold futures ended the week at a five-month high — above $1,210 an ounce — and registered a third straight week of gains. Gold rose in large part due to safe-haven buying as concerns over euro-zone debt woes widened. 
The U.S. House of Representatives on Wednesday, May 5, 2010, passed new legislation that would honor American moms with silver dollar coins struck by the United States Mint. 
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