Gold World News Flash |
- Challenging The Wolfpack
- In The News Today
- Gold Market Update
- Commodity & Index ETF Trading Strategy
- Got Gold Report - Stopped on Silver, Caution Flags Flying
- Bear Market Race Week 134: US Treasury’s Deficit Spending Study
- Optimizing Your Gold Investment Vehicle
- Bernanke: Liar (Again)
- ECB Pulls Bazooka... Did They Shoot THEMSELVES?
- Sell in May and Go Away? 9:00PM EST
- Europe prepares nuclear response to save monetary union
- Distilling BS: Bernanke
- Goldman: Greece Won't Stop S&P's Route to 1,250
- $645B Greek Bailout Plan: Market Soars
- Book Review: Higher Returns From Safe Investments
- Solving a Sovereign Debt Crisis by Issuing More of the Same
- Paperbugs Don't Understand How Far We Have to Go
- European Officials Escalate Steps to Combat Sovereign Debt Crisis
- Got Gold Report – Stopped on Silver, Caution Flags Flying
- More Panic Attacks Are Certain to Occur
- Precious Metals Market Report
- Say You Want a Revolution?
- Hoist the Crash Alert Colours!
- Default Threat Rises
- Is The Greek Debt Crisis Being Purposely Hyped And Manipulated?
- Greek Bailout Plan Increased by a Factor of Five
- The FED announces currency swaps with all major Banks following the announcement of ECB package
- "Private" Federal Reserve Bails Out Europe
- European Central Bank to buy government and private bonds
- Sell in May and Go Away? 9:00PM EST
- Fed reopens dollar credit lines to Europe
- Congressman Grayson: Why We Need an Audit of the Fed
- Will Europe's Show of Force Stem the Slide?
- European Central Bank to intervene in markets, Lux finance minister says
- EU ministers agree on euro defense package
- Has Gold Become A New Reserve Currency?
- Gold Forecaster – Gold at $1,200 Why and will it hold and rise?
- Inflation; A positive development for the Astute Investor
- U.S. Dollar is the new ‘Tulip’
- Mother’s Day Silver Dollar Commemorative Coins Approved in House
| Posted: 09 May 2010 07:43 PM PDT View the original post at jsmineset.com... May 09, 2010 04:01 PM Dear CIGAs, A nuclear solution to Europe’s debt problems is simply another way of saying "Quantitative Easing to Infinity." All national debt will be bailed out. All states of the USA will be bailed out. Paper currencies are headed to dust. Regardless of the first knee jerk market reaction, gold is going to $1650 and beyond due to nuclear suggestions of adding more debt to entities failing because of debt. This is the EU Helicopter Drop coming up. Credit default swaps are herein called the "Wolfpack." About that they are totally correct. Now that they have challenged the "Wolfpack," whatever additional funds might be required will have to be provided or the "Wolfpack" will slaughter the EU. EU Preps Euro Fund to Fight 'Wolfpack,' Debt Crisis By James G. Neuger and Meera Louis May 9 (Bloomberg) — European Union finance ministers pledged to stop a sovereign-debt crisis from shattering confidence in...
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| Posted: 09 May 2010 07:43 PM PDT View the original post at jsmineset.com... May 09, 2010 03:08 PM Thoughts For The Day A euro “save” technically is the euro trading firmly above $1.29. Please note Armstrong’s tome on currency values. The volatility in gold is about to go ballistic. That is another key for gold at or beyond $1650. * Jim Sinclair’s Commentary The spin is that the fall is a mystery and therefore an anomaly, not a selloff of significance indicative of further problems. The truth of the matter is that what you saw here was a combination of computer based flash trading, below the horizon computer based exchanges, and algorithms gone wild. This event is proof that computer markets lack specialists and are ticking time bombs of illiquidity. This problem is alive and well and looking for more repeat performances. Plunge in US equities remains a mystery By Michael Mackenzie and Henny Sender in New York Published: May 7 2010 18:49 | Last updated: May 7 201...
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| Posted: 09 May 2010 07:00 PM PDT Gold ended last week very close to new highs against the dollar, which was a remarkable achievement given that the dollar soared and that the stockmarket fell heavily. The NYSE tried to explain away the near 1000 point drop in the DJIA intraday on Thursday as being due to some sort of technical glitch, but the more plausible explanation for us is that it was occasioned by temporary blind panic, which should it recur would have rather unfortunate consequences, to put it mildly.
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| Commodity & Index ETF Trading Strategy Posted: 09 May 2010 06:29 PM PDT May 9, 2010 As we all know, last weeks stock market blip/mini crash was very emotional for those of you watching or trading it live. A lot of money changed hands last week and you either lost a bundle or made a bundle I did send out some charts and a video on Thursday night about the market crash/recovery if you have not seen it. It's called "Stock Market Micro Intraday Crash Shows Us Where The Safe Havens Are". Below are my ETF charts for the commodities and index I actively follow and trade. GLD – Gold Bullion ETF – Daily Chart GLD is a great ETF to trade as it generates 10-20 quality low risk setups each year for subscribers. The chart clearly shows the large rally in late 2009 and the correction as it formed patterns moving from a down trend – base – and back to an uptrend. $USD – US Dollar Index – Monthly Chart ...
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| Got Gold Report - Stopped on Silver, Caution Flags Flying Posted: 09 May 2010 06:29 PM PDT Rig for heavy weather and hope we don't get it. "Greece is just the coating in the pan to fry PIIGS." – Don Coxe, BMO Capital Markets. ATLANTA – Positive money flow into gold and silver ETFs showed strongly this week as the very viability of one of the world's major fiat currencies (the euro) comes into serious question. Indeed the very existence of the European Union now seems questionable where just two years ago its currency strangely seemed preferable to many. What a difference two years makes these days. Wealth flowed rapidly away from the euro and into U.S. dollars, gold and other havens. We believe the main reason Greece has not already been cut from the E.U. is simple. As long as Greece remains in, it takes the spotlight off the next PIIG in line. We wonder if the now blowing-out credit default swaps have already discounted the next European shoe to drop, and we aren't speaking rhetorically with that. ...
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| Bear Market Race Week 134: US Treasury’s Deficit Spending Study Posted: 09 May 2010 06:29 PM PDT The 1929 & 2007 Bear Market Race to The Bottom Week 134 of 149 US Treasury’s Deficit Spending Study BEV Chart Review Barron’s Confidence Index & Bond Yields Mark J. Lundeen [EMAIL="mlundeen2@Comcast.net"]mlundeen2@Comcast.net[/EMAIL] 07 May 2010 Color Key to text below Boiler Plate in Blue Grey New Weekly Commentary in Black Below is my BEV chart for the Bear Race. What a week! As I’ve noted before, if the DJIA is actually in a Bull Market, it’s due for a correction. A decline of 10% to 15% to shake out the Weak Hands would do. But I suspect Wk 134 of our current Bear Market will prove to be a turning point that ultimately will drive the DJIA below its March 2009 lows, and Deep into Bear Market History. What would suggest my Bearish Case is our future? Well for one thing, this market has much higher trading volume downside than when it’s going up. But importantly, for the first time in many years, possibly decades, when the DJIA di...
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| Optimizing Your Gold Investment Vehicle Posted: 09 May 2010 06:29 PM PDT By Sam Kirtley There are many different investment vehicles one can use to invest in gold. The key aspects that we as investors and traders look for are the vehicles relationship and correlation with gold prices, and how much that correlation is or isn’t leveraged to the gold price. More leverage is not always the objective of an investor, one may be looking for less sensitivity to the gold price, or simply to match gold’s performance. If one is looking simply to match gold’s price performance then this is easily achieved by purchasing the physical metal or a gold ETF like GLD. If one is looking for less sensitivity to gold prices, this again is relatively easy to achieve, by simply buying less gold and holding more in cash, for example instead of investing $1000 in GLD, investing $500 and leaving $500 as cash in your account will give the investor half the overall performance of gold. However it is when we are aiming to increase our leverage to gold prices that th...
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| Posted: 09 May 2010 06:29 PM PDT Market Ticker - Karl Denninger View original article May 09, 2010 05:55 PM From The Fed: [INDENT]In response to the re-emergence of strains in U.S. dollar short-term funding markets in Europe, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing the re-establishment of temporary U.S. dollar liquidity swap facilities. [/INDENT]There's been no "strain" in dollar funding markets. There has been an extreme level of strain in Euro funding markets. But see, the Europeans just announced they're going to use an SPV - that is, a secret off-balance sheet funding vehicle with over €400 billion in it. Who's going to provide the €400 billion? The Fed? (Yes, I know what the Euro folks said. Now how about some transparency? You see, I trust them as much as I trust OUR political and banksters - that is, not at all.) With what authority does Bernanke effectively appropriate? Was there an a...
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| ECB Pulls Bazooka... Did They Shoot THEMSELVES? Posted: 09 May 2010 06:29 PM PDT Market Ticker - Karl Denninger View original article May 09, 2010 07:29 PM One wonders if people think before they write in the mainstream media: [INDENT] May 10 (Bloomberg) -- Asian stocks, U.S. index futures and the euro surged as European policy makers unveiled a loan package worth nearly $1 trillion and a program of securities purchases to end a sovereign-debt crisis. [/INDENT] The solution to a debt crisis is....... more debt? A loan is a debt, you know. So we're going to solve a sovereign debt crisis by issuing more debt. And we will get people to buy this (new and additional) debt because......we're pretty? The most-amusing part of this are that nations seriously in debt and without a pot to piss in will be "contributing" some of the money to fund the debt. Spain, for instance, has pledged to do so. Where is Spain going to get the money from? Will they sell bonds at 8% to fund a loan at 5%? That's a very nice idea.... let's see, ...
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| Sell in May and Go Away? 9:00PM EST Posted: 09 May 2010 06:29 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here May 09, 2010 05:02 PM After last week's action, "sell in May and go away" doesn't look all that bad at the moment. But if one did, where would one go: cash, U.S. Treasuries, U.S. Dollar, gold? And if one did, when do you come back…if at all? Remembering that I put my pant legs on one leg at a time like everybody else, I will try to paint the big picture and also comment on selected model portfolio stocks and Grandich client companies. The Big Picture – To long time readers, please excuse me rehashing views that I've often spoken about over the years but understand there are many, many new readers who may not be aware of them and/or need a reminder. For starters, I've long stated that traditional financial planning is a flawed process. Whether a plan was created by some computer-driven process that spits out fancy bar charts, graphs and all sorts of redundant data, or like the old da...
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| Europe prepares nuclear response to save monetary union Posted: 09 May 2010 06:29 PM PDT May 09, 2010 10:54 AM - Are Europe's leaders grasping the nettle at last? Faced with the imminent disintegration of monetary union, they appear poised to create the beginnings of an EU debt union and authorize the European Central Bank to step in immediately to stabilize the eurozone bond markets. Read the full article at the Telegraph......
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| Posted: 09 May 2010 06:29 PM PDT Market Ticker - Karl Denninger View original article May 09, 2010 07:54 AM You have to love Bernanke giving commencement addresses... [INDENT]"Having a larger income is exciting at first, but as you get used to your new standard of living and as you associate with other people in your new income bracket, the thrill quickly wears off," he said. [/INDENT]Really? Has it worn off for people like, for instance, Lloyd Blankfein? And let's think about this for a second - will you be happy if you wind up living in a refrigerator box under a freeway overpass? I think not. Notice that this article omits something from the original speech though.... [INDENT]Along with price stability, maximum employment is one of the Congress's two mandated objectives for the Federal Reserve. [/INDENT]Price stability eh? How have you done with that mandate Ben? Oh more generally, how has The Fed done since 1913? Well, let's see. How do house prices compare against 1913? ...
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| Goldman: Greece Won't Stop S&P's Route to 1,250 Posted: 09 May 2010 06:09 PM PDT The Pragmatic Capitalist submits: Goldman Sachs isn’t backing down from their very bullish call of S&P 1,300 by mid-year. Their analysts say the Greek debt woes are unlikely to halt the strong global recovery. Specifically, they highlight the continuing low valuations, stronger than expected earnings, robust recovery and positive money flows. Last week’s strong labor report and robust ISM readings were unjustly ignored in their opinion. Complete Story »
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| $645B Greek Bailout Plan: Market Soars Posted: 09 May 2010 05:59 PM PDT The Pragmatic Capitalist submits: Markets are set for another Monday Melt-up as another Sunday evening came to an end with a new Greek bailout plan. Bloomberg is reporting that the latest and greatest bailout will amount to a staggering $645B:
Complete Story »
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| Book Review: Higher Returns From Safe Investments Posted: 09 May 2010 05:53 PM PDT  David Merkel submits:
This book gets a mixed review from me. If I were reviewing it 14 months ago, when everything was in chaos, I would have given it a better review. There are times to take credit risk, and times not to. There are times to extend maturity, and times not to. There are times to seek inflation protection, and times not to. There are times to invest abroad, and times not to. Complete Story »
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| Solving a Sovereign Debt Crisis by Issuing More of the Same Posted: 09 May 2010 05:46 PM PDT Karl Denninger submits: One wonders if people think before they write in the mainstream media:
Complete Story »
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| Paperbugs Don't Understand How Far We Have to Go Posted: 09 May 2010 05:29 PM PDT The value of common stocks relative to Gold is about to accelerate in the opposite direction the Larry Kudlow and Jimmy Jack Cramer crowd are expecting. The concept of relative wealth is an important one for Gold bulls to comprehend and embrace, as it allows them to calculate gains in something besides unstable paper debt-backed fiat currency, which is a worthless measure of value. In other words, it negates the need to worry about the inflation-deflation debate.
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| European Officials Escalate Steps to Combat Sovereign Debt Crisis Posted: 09 May 2010 05:24 PM PDT Marc Chandler submits: Word is still not official, but clearly European officials have taken another step up the escalation ladder to combat the sovereign debt crisis that is threatening to disrupt the recovery seen in the capital markets over the past year. The latest is that as much as a 600 bln euro package is being put together. It appears that it may consist of around 440 bln euro of loan guarantees and another 60 bln euro stabilization fund. The IMF may provide another 100 bln euros. As often, the devil is in the details and the specifics are not clear yet. The market wasted no time though to reduce short euro positions. The extreme market positioning is not simply in the record short euro spec positions at the IMM (which is now more than twice the record short set in 2008), but also in the premium for euro puts over euro calls (3 month risk reversal closed a little above 3.25%), which is also a record. Complete Story »
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| Got Gold Report – Stopped on Silver, Caution Flags Flying Posted: 09 May 2010 05:23 PM PDT Positive money flow into gold and silver ETFs showed strongly this week as the very viability of one of the world's major fiat currencies (the euro) comes into serious question. Indeed the very existence of the European Union now seems questionable where just two years ago its currency strangely seemed preferable to many.
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| More Panic Attacks Are Certain to Occur Posted: 09 May 2010 05:04 PM PDT So, was it thinking machines that put stocks into a death dive last week, or was it primal human fear? Either way, there's a neurological disease at work and therefore little likelihood of a cure. Even worse, since these diseases tend to be degenerative, we should expect something still more disruptive in the future. Ham-handed regulations won't be able to stop it, either.
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| Posted: 09 May 2010 04:33 PM PDT The outlines of our situation are becoming clearer to a much wider audience. For many years, there has been an assumption that sovereign governments could print paper and make promises and somehow find ways of making good on all of them. While that is still theoretically true for powerful nations, global governance is now struggling with [...]
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| Posted: 09 May 2010 04:27 PM PDT "People of Europe: Rise Up," says their banner. Greek communists are usually a reliable bastion of error and darkness. Their ideas are appalling. Their proposals are absurd. The only thing they are not wrong about is their opinion of the ruling classes - whom they regard as morons. But this time it's different. Leftist mobs, now throwing missiles at policemen in Athens, have the high ground. They just need to work on their aim. The latest dollop of financial grease was announced two weeks ago. At a cost of 110 billion euros, Europe will pretend to protect Greece from its creditors and the Hellenes will pretend to put their financial affairs in order. Instead, the Greek affair will slide into a larger crisis. As we explained last week, all of modern macro-finance can be understood as an attempt to push problems into the future and onto people who were not to blame for causing them. Now we see the formula at work in Europe. Greeks borrowed money they couldn't reasonably expect to pay back. Foreign bankers - largely French and German - hoped to earn outsized yields by taking a risk on Greek debt. A just ruler would let them all collapse, and give them the boot on the way down. Instead, the knaves enjoyed their loot. And, under the terms of the bailout, the fools are supposed to get their money after all; it will be squeezed out of taxpayers all over Europe. The plans of the ruling classes are not merely unjust. They are unworkable. Over the next three years, Greece will add $50 billion in deficits, stabilizing the debt at 150% of GDP. It will also need to come up with $70 billion to pay off debt that matures over the next two years. That is more than the amount offered in the bailout. Which means, Greece will have to borrow more money as early as next year, probably triggering another crisis. Plus, there are the other weak sisters and spendthrift brothers in the European family. Bailing them all out could cost as much as 1 trillion euros. But the real problem is much deeper. It is philosophical as well as mathematical. Too much debt, like too much dying, is not a transitional state. It's a final state. And once the soul has left the body, there is no point in trying to keep the husk alive. Similarly, when a debt cannot be repaid, there's no use pretending. When you cannot keep up with the interest on a debt, it is added to the principle. The debt grows, becoming evermore unmanageable. It's better to admit the error as soon as possible and start organizing the details of your financial funeral. At present, the Greeks owe an amount about equal to 120% of GDP. Thanks to the bailout, it is scheduled to go up. The plan on the table stops the debt growth only after it has increased by another 30% of GDP. There is the problem right there. Today, the poor Greeks stagger. What is going to happen when they have an even heavier load? The meddlers hallucinate that they'll get up, smash a plate and dance a mazurka. They even imagine that lenders - who required as much as 18% yield on 2-year notes when Zorba was still on his feet - will ask for only a fraction of that after his back has been broken. Let us make believe that this were possible. Say, Greece is able to borrow in the future at just 8% interest. At 150% of GDP, this puts the annual cost of interest (assuming all the debt were at 8%) at about 12% of GDP. In other words, 1 out of every 8 euros of output would have to be put to the task of paying the carrying cost of accumulated debt. Greece only collects about 5% of GDP in income tax revenues - not even half of what is needed to pay the interest. It's supposed to collect another 4% in taxes. Already, as much as 30% of the Greek economy has gone 'black' to escape taxation; imagine how crowded it gets underground when taxpayers realize that every penny they pay in income tax is used to protect foreign bankers from their foolish speculations. And imagine what happens when, instead of adding 10% to GDP by borrowing, the Greeks subtract 10% to pay back the debt. Last week, schools, airports, hospitals and other services in Greece were shut down. A riot drew blood. Fifty-one percent of the Greeks said they will not go along with the austerity program. The others will turn against it once they see how it works. They were used to having their cake and eating it too. Now, they will neither have it nor eat it. Rise up, ye Greeks! You have nothing to lose but the chains of debt! This is what revolutions are for. Bill Bonner
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| Hoist the Crash Alert Colours! Posted: 09 May 2010 04:24 PM PDT Whammo! Is our 'Crash Alert' flag still flying? It is? Great. The Dow got whacked hard yesterday. It was down a few hundred points. And then, somehow, the computer programs triggered the sell signal from hell. It lost another 500 points in just a few minutes. Then, the computers must have reconsidered. They went into buy mode. All very strange... Was it just a mistake? Something weird? Was it a genuine panic...and a phony bounce? Or a phony panic and a genuine bounce? The story last night was that the sell-off was a mistake...that someone hit the wrong button and added a zero. We don't believe it. Traders must add zeros by mistake all the time. This is the first time it triggered a 998-point drop. As for the recovery, it's suspicious too...maybe some kind of automatic reaction - perhaps from 'buy the dip' program trading, maybe from the mysterious "plunge protection" machinery of the US government. We don't know. But what this tells us is what we've been telling you: this is a dangerous market. It is no place for widows, orphans, nuns, priests, republicans, democrats, window-washers, bungee jumpers... ..it's a good market for gamblers. And if you were long the VIX yesterday, you made a killing. Everyone else got killed. But it was fun for us. You see, you start out life full of expectations and confidence. Then, you become more cautious. Then, you become more realistic. And then, you become discouraged and hopeless. Finally, after you've given up all hope of ever making the world a better place, you become amused by it; you realize that there's no reason to change it. It's funny enough the way it is. That's the way we felt yesterday, watching the market go wild in the afternoon. "Hey, Dad...you seem to be enjoying this," said Jules. "But you must be losing money along with everyone else." "Maybe...but it's worth it." We don't own US stocks. But we have some from emerging market shares. They went down with everything else. And we wouldn't be surprised if they went down a lot more. Why? ..Because China is going to blow up. It's on a 'treadmill to hell,' says short-seller Jim Chanos. ..Because the US economy is not really recovering. The latest numbers show retail spending sinking again. Bankruptcies are rising. Housing and unemployment remain in the dumps... ..Because the US stock market has been in a decline - in real terms - since January 2000. This move to the downside won't really end until stocks are cheap again. ..Because there's more bad new coming from Europe too...keep reading... In the news tonight (on TV) are pictures from Greece, where the police are trying to keep an upper hand against demonstrators. What are the protestors so irritated about? They're protesting against 'austerity' measures. They say it's unfair to cut a pensioner's monthly check while paying the bankers 100% of what they were due. They've got a point. The government should cut them both. This is a drama worth watching. Partly because it is fascinating. Partly because it is a coming attraction. It won't be too long before the US is in the same position. So let's watch carefully. The Greek government committed itself to cut one of every 5 euros out of its budget. That means it has to cut back on 'services.' 'Government services'? Practically oxymoronic... You're suspicious from the get-go. Generally, the more services you get from the feds, the worse off you are. Prisoners in federal penitentiary, for example, can thank the government for everything, from the roof over their heads to their daily bread. Being a guest of the state is something you want to avoid. Even when the government is providing services you actually want - such as delivering the mail - it usually does so with such clumsiness that they end up costing far more than they should. "You know," said Judge Andrew Napolitano on Saturday, "the government foreclosed on a brothel, here in the state of Nevada. Apparently, the owners didn't pay their taxes. The Mustang Ranch, it was called. It had been a profitable business. Then, after the government took it over, it started losing money. It's almost unbelievable. Only the government could lose money offering hookers and booze to truckers." To this story, Chris Hunter, our family office financial analyst, replied: "This is a good story...but it's an apocryphal one... "The feds never ran The Mustang Ranch... The IRS just auctioned it off... "The story comes from an email rumor that started circulating in 2008." Well, if the story isn't true, it ought to be. We watched some public employees at work in Baltimore the other day. Four guys sat in a truck, with the motor running, while one guy walked lazily over to shovel something off the sidewalk. The city could probably fire 4 out of 5 of its employees and the city would work better. But the employees would pitch a fit. "They'd complain that the poor would freeze and starve," said a colleague. "They'd say that children wouldn't learn to read, that the library shelves would be empty, and the traffic lights wouldn't work and that murderers would walk the streets with impunity." "How's that any different from it is now?" we wondered. "Well, they wouldn't say 'impunity.' Public employees tend to stick to shorter words. Besides, no one walks in Baltimore. Even with impunity. It's too dangerous. You'd need to have a cop at your side. And I guess that's the problem. If they fired the policemen there wouldn't be a policeman to tell your wife and kids after you got shot and killed. Maybe they could send an email. If they knew how to use the Internet..." Baltimore...Athens...Rome - almost all over the world, the story is the same. Public employees earn too much money. They get the best pensions. They get the best health care. They work little and get paid a lot. In America, as in the rest of the world, they tend to earn about 30% to 50% more than workers in the private sector. And come a recession they don't lose their jobs. They have powerful lobbies...and direct access to legislators. That's part of the reason the Washington, DC area suffered much less in the downturn than other metropolitan areas in the US. The roads are still packed with shiny new cars. The restaurants seem to be as full as ever. Our area has million-dollar houses...with 2-bit politicians, lawyers and lobbyists in them. Yes, they came to Washington to do good...and they have done very well. Greece will default anyway. Regards, Bill Bonner
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| Posted: 09 May 2010 04:18 PM PDT Well it's all happening very fast now. But let's pause for a moment to reconsider what may have happened last week with Wall Street's "trading glitch." Is it possible that traders saw the cops beating protestors in the Streets and surmised this: No matter what deal European leaders come up with to bailout Greece, that deal isn't going to fly on the streets of Athens. The Greek people will not feel obligated to keep the promises made by their politicians to the IMF. Greece is going to default on its debt. If Greece goes then a lot of interesting things start to happen. But that is not the "narrative" being put out by the mainstream today. The official line today is that the $500 billion loan and lending package agreed to by European government is enough to roll over Greek debt, avoid a crisis, defend the euro, and put an end to the widening credit default swaps in the derivatives market. The trouble for Europe is that Greek debt is the tip of the spear. The Greek's must roll over $15.8 billion in debt this year and $31.3 billion next year. As Bill shows below, it's hard to imagine Greece devoting a larger share of tax income to debt service while the economy shrinks. It won't be politically tolerable. But what about the $251 billion in Italian sovereign debt that matures this year? And the $76.5 billion Spanish debt? And the $17.9 billion in Portuguese debt? The €500 billion aid package is not enough to disguise the fact that Europe's debts are larger than the Europe can repay without resorting to debt default or the alternative: massive money printing. The bond market has figured this out. In Europe and North America, the cost of buying insurance against a bond default in corporate and sovereign debt. According to Bloomberg, "The Markit iTraxx Europe Index, linked to the bonds of 125 companies, soared 45 basis points to 133 basis points as of May 7, according to Markit Group Ltd. The Markit CDX North America Investment Grade Index, tied to 125 companies in the U.S. and Canada, jumped 26.6 basis points to 118.7." But did the action in the CDS market migrate to Australia? Well, according to Bloomberg this morning, the news of the big deal in Europe took some starch out of the widening CDS spreads here in Australia. "The cost of protecting Australian corporate bonds from non-payment fell the most in more than nine months, according to traders of credit-default swaps. The Markit iTraxx Australia index fell 15 basis points to 114.5 basis points as of 8:19 a.m. in Sydney, the biggest drop since July 21, according to prices from Nomura Holdings Inc. and CMA DataVision in New York." That would suggest some major easing of the tensions in credit markets. But we'd take that with a major grain of salt. One quotation and one chart from the weekend tell Australian investors nearly everything thing they need to know about the effect a European sovereign debt meltdown would have on Aussie stocks and financial institutions. The quotations come from Eric Johnston at the Age. On Saturday he reported that, "Banks face a surge in wholesale financing costs as fears of contagion spread through global credit markets, with still-fresh memories of the funding squeeze during the global financial crisis not far behind. Some of the nation's major banks were yesterday believed to be looking at measures to top up holdings of liquid assets as concerns about risk increased on European credit markets. While Australian and Canadian banks continue to have ready access to credit markets, longer-term debt was becoming harder to obtain, bank treasury sources said." Once again the link between solvency and liquidity rears its ugly head. Europe's troubles migrate to Australian balance sheets. And you can see the final proof of the pudding in the chart below from CMA Market data. It shows that when anxiety peaked last Friday night, it was Aussie banks that showed the largest credit deterioration in terms of the increase on their CDS. In other words, the cost of insuring yourself against default in the bonds of these Aussie firms went way up late last week.  That doesn't mean any of these firms are going to default. But it does mean bond market investors realise that a global capital crisis that begins in Europe has a massive affect on Australian banks. The effect is not so much on Aussie loan losses of European assets, although there is some exposure there. The effect is a liquidity crisis which forces banks to raise cash by selling assets. The assumption domestically is that the banks won't have any trouble finding money to borrow abroad. But it might be a lot more expensive. And that might lead to higher bank interest rates here and less borrowing. Oh and by the way, the CDS rates for the miners were up too, last week, thanks to RuddTax and concerns about a China slow down. There's a lot more to say. But we're off to work on the May issue of Australian Wealth Gameplan. In the meantime, if you're wondering what the end result of all the machinations in Europe are, it's probably more money printing, which explains gold's recent move. And because the biggest debt problem of all is in America, you can expect more of this too. Dan Denning
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| Is The Greek Debt Crisis Being Purposely Hyped And Manipulated? Posted: 09 May 2010 04:11 PM PDT
Right now almost all of the governments in the western world operate debt-based economies that rely on ever-inflating amounts of paper money in order to survive. The elite international bankers of the world have made a killing by creating money out of nothing and loaning it to the nations of the world. The interest on those loans is the primary method by which the wealth of the world is slowly transferred into the hands of the ultra-wealthy. When the interest on the loans starts to become too much for a particular nation, they borrow even more money so that they can stay afloat. It is a debt trap that is designed to continue indefinitely. Even the most powerful nations in the world are caught in this debt trap. In fact, most people are absolutely amazed when they learn that it is mathematically impossible to pay off the national debt of the United States. But the United States is far from alone in that respect. Almost all of the other major nations in the world are in the exact same boat. So what normally happens when a nation like Greece gets into big trouble is that they just go out and borrow even more money from the international bankers. But this time the big financial powers are insisting on big budget cuts and other "austerity measures". So what is the deal with that? Well, there are a couple of possibilities. The first alternative is that the IMF and the European Central Bank actually believe that the financial situation in Greece has gotten so desperate that they could actually be forced to default on their debt and so something dramatic needs to be done. You see, the truth is that the international bankers want the game to continue no matter what. They are a parasite, and they can't keep draining a host if the host dies. So it does them no good for the economy of Greece to completely die. So maybe they are just trying to revive the host economy (Greece) so that they can continue slowly draining the wealth of that nation. And perhaps that is all that is happening here. After Greece agreed to the required "austerity measures", the EU and the IMF extended to Greece the bailout loans that they needed, and on Sunday European Union finance ministers agreed to create a 750 billion euro safety net for troubled eurozone countries. The EU's monetary affairs commissioner, Olli Rehn, says that this safety net "proves that we shall defend the euro whatever it takes." There are even rumors that the ECB is prepared to engage in a new round of quantitative easing. That would entail very large loans to distressed governments in the eurozone in the form of buying up their bonds. Of course all of this "help" is just more debt that continues to put Greece into an even bigger hole, but at least Greece will not be faced with immediate default. The second alternative is that what is going on is the financial powers of the world are deliberately hyping and manipulating the Greek debt crisis because they actually want to crash the world economy. At this point, the debt crisis in Greece has been hyped for weeks on end, and the kind of alarm being raised about the situation is Greece just seems massively out of proportion. After reading some of the recent news reports coming out of Europe, you would think that the world is on the verge of a financial doomsday just because of what is happening in Greece. The following excerpt from the Guardian is representative of what we have been seeing in recent days.... "The growing crisis in the eurozone threatened to undermine the global economic recovery as markets plunged across the world on fears that European leaders may not be able to contain the debt contagion spreading from Greece." In fact, just about wherever you turn some financial expert is coming forward with predictions that the "contagion" of the Greek debt crisis is going to spread and cause economic chaos all over the world.... Harvard University economist Jeffrey Frankel: "What we have seen is that contagion has gone global" Japan's deputy finance minister, Rintaro Tamaki: "All the financial markets are now in turmoil" Finance Minister Anders Borg of Sweden: "We now see herd behavior in the markets that are really pack behavior, wolfpack behavior." The truth is that this Greek debt crisis could end up being the first domino in a sovereign debt crisis that will sweep the globe - if that is what the international bankers want. If the international bankers decide to cut off the ever-expanding flow of debt to the nations around the world it would create a disastrous financial crisis. Without the loans that they desperately need, country after country would plunge into an economic nightmare that most people do not even think is possible. So would the international bankers ever do that? They have done it before. Just study the causes of the Great Depression. Now there are indications that it may be getting ready to happen again. Suddenly everyone is starting to talk about the "austerity measures" that will not only have to be implemented in Greece but all over the world. For example, check out this recent quote from an article in the Guardian.... "Riots and strikes in Greece could be repeated in other countries which have yet to adopt their own austerity packages." Other countries which have yet to adopt their own austerity packages? And it just isn't Greece, Italy, Spain and Portugal they are talking about. Bank of England governor Mervyn King recently warned that public anger over the "austerity measures" that soon must be implemented in the U.K. will be so intense that whatever party wins this election will be out of power for a generation. Austerity measures in the U.K.? Not only that, but Federal Reserve Chairman Ben Bernanke is publicly saying that United States citizens will soon have to make difficult choices between higher taxes and reduced social spending. Why all of a sudden do nations all over the world have to implement austerity measures? Why all of a sudden are we all being told that we are going to have to tighten our belts? Well, unless all of this was planned of course. And that is exactly what some out there are claiming is happening. There is a belief by many that the financial powers of the world are going to create a world economic crisis (the problem) so that when everyone cries out for help (the reaction) they will be there with the solution they wish to propose (perhaps a world currency or increased global governance). In fact, Pastor Lindsey Williams even claims that an individual who is from these elite circles has told him exactly what is coming. If you have never heard of Lindsey Williams you should really check out the video posted below. He was the one (based on inside information from his source) who correctly predicted a couple years ago that oil would go down to 50 dollars a barrel when at the time it was pushing up into record territory. When oil did in fact plunge down to 50 dollars a barrel people were not laughing at him anymore. Now, the same source has told him that a massive economic downturn is planned over the next couple of years.... So is Lindsey Williams right? As with so many things, time will tell. But when top banking officials all over the world start talking about "austerity measures" and the need to tighten our belts, it is best to start paying attention. We are moving into a time of extreme economic uncertainty. To the folks that play around with hundreds of billions of dollars, you are nothing more than a pawn on a chessboard. If you believe that "things are always going to be good" and that the people with real power in this world honestly care about you then you are going to end up in a whole lot of trouble. Now is the time to prepare while there is still time. Someday when the U.S. economy does completely collapse and you have done nothing to prepare it will be far too late.
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| Greek Bailout Plan Increased by a Factor of Five Posted: 09 May 2010 03:59 PM PDT Trader Mark submits: We are back to 2008... it's Sunday night, so that means someone is getting bailed out. After agreeing to a bailout just a week ago of some $160Bish, European and IMF (read: US) officials have taken the stakes to the stratosphere with a proposed $800B bailout. Now we're talking real money. Obviously Bernanke was called in to teach 'em how to do it right... this is a statement to the bond vigilantes that yes we can fight a debt crisis with even more debt, U.S. style. Much like the US ring fenced its financial oligarchs, the Europeans are attempting to ring fence their debt laden brothers in arms. Now all the Europeans need to do is allow their central bank to buy government debt and every major region in the world with be monetizing debt (i.e. stealth defaults) - got gold? Complete Story »
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| The FED announces currency swaps with all major Banks following the announcement of ECB package Posted: 09 May 2010 03:55 PM PDT
As I have said before in the comment section under numerous articles in the past month or so, Federal Reserve Bank decided that the surge in the dollar exchange against other currencies, but most importantly the Euro, can not sustain FEDs long term plans concerning the recovery of the US economy. In a statement issued late this night FED announced re-opening of swap facilities which will take the strain off the USD. Full statement can be read beneath.
Trade accordingly or do not trade at all; your choice, but the madness we have witnessed in the FX market shortly after the EMU members announced a 720 billion euros rescue package, and basically broke their own law by announcing sovereign bond buybacks in the secondary market and thus insured a massive QE program, will be repeated not on a daily basis, not on an hourly basis but on a tick basis. Well I can not say that this was unexpected but what does surprises me how short of a time [an hour or so] took the FED to announce the re-opening of swap facilities and how apparently well coordinated was the effort among the Banks. Expect equity futures to trade significantly higher and for the DOW to brake 12k in a week or so. Apparently when nothing else is left hyperinflation is left since nothing else matters except constant 10 second up ticks on all major global equity indexes every day, every year until time itself can not, for much longer, endure the constant rise in the equities. Enjoy what is left of your purchasing power and do not forget to load up on gold.
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| "Private" Federal Reserve Bails Out Europe Posted: 09 May 2010 03:34 PM PDT WASHINGTON – The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent. Other central banks, including the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank, are also involved in the effort. The move comes after the European Union and International Monetary Fund pledged a nearly $1 trillion defense package for the embattled euro, hoping to calm jittery markets and halt attacks on the eurozone's weakest members. The ECB also jumped into the bond marketSunday night, saying it is ready to buy eurozone bonds to shore up liquidity in "dysfunctional" markets. The Fed's action reopens a program put in place during the 2008 global financial crisis under which dollars are shipped overseas through the foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding to prevent the European crisis from spreading further. The Fed said action is being taken "in response to the reemergence of strains in U.S. dollar short-term funding markets in Europe," and to prevent the spread of that strain to other markets and financial centers. The Bank of Japan will be considering similar action soon, the Fed said. A so-called "swap" line with the Bank of Canada provides up to $30 billion. Figures weren't provided for the other central banks. The arrangements are authorized through January 2011. 
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| European Central Bank to buy government and private bonds Posted: 09 May 2010 02:51 PM PDT By Gabi Thesing and Jana Randow http://www.bloomberg.com/apps/news?pid=20601087&sid=a0RoeU1FECGY&os=3 The European Central Bank said it will intervene in government and private bond markets as part of an unprecedented effort to help stave off a sovereign debt crisis that threatens to destroy the euro. "The Governing Council decided to conduct interventions in the euro-area public and private debt securities markets to ensure depth and liquidity in those market segments which are dysfunctional," the Frankfurt-based central bank said in a statement today. "The scope of the interventions will be determined by the Governing Council." The ECB said it will sterilize the purchases and announced it will hold additional longer-term operations at three- and six-month maturities. The central bank also said that it will reactivate temporary liquidity swap lines with the Federal Reserve to resume U.S. dollar tenders at terms of 7 and 84 days. The announcement came after European finance ministers crafted a loan package that may be worth E720 billion $928 billion) in an effort to protect the single currency bloc. 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 Preliminary Feasibility Study Completed for Seabridge Gold's KSM Project Study Reports Reserves of 30.2 Million Oz. Gold, 7 Billion Lbs. Copper, Base Case Life of Mine Cash Operating Costs Estimated at $144/oz. Gold Produced Toronto -- Seabridge Gold Inc. has announced results from a National Instrument 43-101 compliant preliminary feasibility study of its 100-percent owned KSM project in northern British Columbia, Canada. The study was prepared by Wardrop, a Tetra Tech company, a major international engineering and consulting firm. Seabridge President and CEO Rudi Fronk says, "The study confirms that the KSM project now hosts the largest gold reserve in Canada and one of the largest in the world. KSM is projected to provide an extraordinary mine life of more than 35 years with estimated cash operating costs well below the current average of the major gold producers. Estimated capital costs are in line with those of comparable, large-scale, undeveloped gold-copper projects and KSM has the advantage of being located in a low-risk jurisdiction." For the complete Seabridge Gold statement: http://www.seabridgegold.net/readmore.php?newsid=283
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| Sell in May and Go Away? 9:00PM EST Posted: 09 May 2010 02:50 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here May 09, 2010 05:02 PM After last week's action, "sell in May and go away" doesn't look all that bad at the moment. But if one did, where would one go: cash, U.S. Treasuries, U.S. Dollar, gold? And if one did, when do you come back…if at all? Remembering that I put my pant legs on one leg at a time like everybody else, I will try to paint the big picture and also comment on selected model portfolio stocks and Grandich client companies. The Big Picture – To long time readers, please excuse me rehashing views that I've often spoken about over the years but understand there are many, many new readers who may not be aware of them and/or need a reminder. For starters, I've long stated that traditional financial planning is a flawed process. Whether a plan was created by some computer-driven process that spits out fancy bar charts, graphs and all sorts of redundant data, or like the old da...
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| Fed reopens dollar credit lines to Europe Posted: 09 May 2010 02:40 PM PDT By Jeannine Aversa http://news.yahoo.com/s/ap/20100510/ap_on_bi_ge/us_europe_financial_cris... WASHINGTON -- The Federal Reserve on Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent. Other central banks, including the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank, are also involved in the effort. The action reopens a program put in place during the 2008 global financial crisis. Under the program, dollars are shipped overseas through the foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding to prevent the European crisis from spreading further. The Fed said action is being taken "in response to the re-emergence of strains in U.S. dollar short-term funding markets in Europe." The debt crisis first erupted in Greece and there are fears that it could spread to Spain, Portugal and other European countries. The crisis has pushed up demand for the U.S. dollar and has weakened the value of the euro, the currency used by 16 European countries. The Fed said the action was being taken to "prevent the spread of strains to other markets and financial centers." The Bank of Japan will be considering similar action soon, the Fed said. The so-called "swap" line with the Bank of Canada provides up to $30 billion. Figures weren't provided for the other central banks. The arrangements were authorized through January 2011. The Fed had wound down these crisis-era programs with other central banks in February, along with other emergency programs to get lending flowing more freely again and return stability to financial markets. ADVERTISEMENT Silver Phoenix Resources Inc. 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| Congressman Grayson: Why We Need an Audit of the Fed Posted: 09 May 2010 02:31 PM PDT  Prieur du Plessis submits: Rep. Alan Grayson said to American taxpayers: “You own the Red Roof Inn, thanks to the Fed.” In this clip, he again argues for the great need of an audit of the Fed. Complete Story »
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| Will Europe's Show of Force Stem the Slide? Posted: 09 May 2010 01:46 PM PDT
In my last comment, I said European leaders will do whatever it takes to shore up the financial system and avoid debt deflation. With this move, they're sending a strong signal that they will do whatever it takes to support the EMU, and curb any speculative attacks on the euro and European sovereign debt. Following the announcement, the Euro is surging and stocks are advancing. In my opinion, European leaders didn't have a choice. Heavy speculative attacks were threatening their bank funding system, and had they done nothing, a run on banks was inevitable. As for Greece, the WSJ reports that the IMF approved its rescue package, and urged against debt default. Finally, the FT reports that Barroso fires salvo at markets:
Listen carefully to President Barroso below. The message to speculators is clear: you no longer have free reign to mount destructive speculative attacks on European sovereign debt or the Euro. Even though it's late, Europe's show of force is resolute and decisive. In my opinion, this will have a profound impact on markets, helping shore up confidence and it will stem the slide to deflationary depression.
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| European Central Bank to intervene in markets, Lux finance minister says Posted: 09 May 2010 01:19 PM PDT EU Crafts $928 Billion Show of Force to Halt Crisis By James G. Neuger and Meera Louis http://www.bloomberg.com/apps/news?pid=20601087&sid=ap50DW8IqhBo&os=1 BRUSSELS, Belgium -- European finance ministers put together an unprecedented loan package that may be worth 720 billion euros ($928 billion) for debt-swamped governments in a bid to restore faith in the euro and prevent Greece's fiscal woes from unleashing a global crisis. Jolted into action by last week's slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments pledged to make E440 billion avaiable, with E60 billion more from the EU's budget, said Spanish Economy Minister Elena Salgado at a press conference in Brussels today. The International Monetary Fund may provide a further 220 billion euros, she said. "We are placing considerable sums in the interests of stability in Europe," Salgado told reporters in Brussels after chairing the 14-hour meeting. Under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart. The European Central Bank will announce "intervention" in financial markets, Luxembourg Finance Minister Luc Frieden told reporters, without giving further details. Europe's failure to contain Greece's fiscal crisis triggered a 4.1 percent drop in the euro last week, the biggest weekly decline since the aftermath of Lehman Brothers Holdings Inc.'s collapse. It prompted President Barack Obama to call German Chancellor Angela Merkel and French President Nicolas Sarkozy yesterday to urge "resolute steps" in Europe to prevent the crisis from cascading around the world. 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 Preliminary Feasibility Study Completed for Seabridge Gold's KSM Project Study Reports Reserves of 30.2 Million Oz. Gold, 7 Billion Lbs. Copper, Base Case Life of Mine Cash Operating Costs Estimated at $144/oz. Gold Produced Toronto -- Seabridge Gold Inc. has announced results from a National Instrument 43-101 compliant preliminary feasibility study of its 100-percent owned KSM project in northern British Columbia, Canada. The study was prepared by Wardrop, a Tetra Tech company, a major international engineering and consulting firm. Seabridge President and CEO Rudi Fronk says, "The study confirms that the KSM project now hosts the largest gold reserve in Canada and one of the largest in the world. KSM is projected to provide an extraordinary mine life of more than 35 years with estimated cash operating costs well below the current average of the major gold producers. Estimated capital costs are in line with those of comparable, large-scale, undeveloped gold-copper projects and KSM has the advantage of being located in a low-risk jurisdiction." For the complete Seabridge Gold statement: http://www.seabridgegold.net/readmore.php?newsid=283
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| EU ministers agree on euro defense package Posted: 09 May 2010 01:13 PM PDT By Raf Casert and Elena Becatoros http://news.yahoo.com/s/ap/eu_europe_financial_crisis BRUSSELS, Belgium -- European Union finance minsiters agreed Monday on a 720-billion-euro and International Monetary Fund safety net for troubled eurozone countries, hoping that it will keep markets from targeting the weaker members of the 16 countries that use the embattled euro. Under the three-year aid plan, the EU Commission will make E60 billion ($75 billion) available while countries from the 16-nation eurozone would promise bilateral backing for E440 billion ($570 billion). The IMF would contribute an additional sum of at least half of the EU's contribution, or E220 billion, Spanish Finance Minister Elena Salgado said. The EU's monetary affairs commissioner, Olli Rehn, said the agreement "proves that we shall defend the euro whatever it takes." The agreement was reached after marathon 11-hour talks in an emergency finance ministers' meeting hastily convened Sunday amid concerns that the financial crisis sparked by Greece's runaway debt problems had begun to spread to other financially troubled eurozone countries such as Portugal and Spain. ADVERTISEMENT Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot: The conference will explore the dangers and opportunities in today's bullion markets and the need for investors to diversify bullion holdings outside of bullion banking and commodities markets. Speakers will include David Morgan of Silver-Investor.com, Gold Anti-Trust Action Committee Chairman Bill Murphy, and Duncan Cameron and Philip Judge of Anglo Far-East Bullion Co. The earliest conference attendees on Saturday will be able to schedule one-on-one interviews for personal consultation with Anglo-Far East's experts on Sunday. To learn more about and register for the Anglo Far-East Bullion conference, please visit: http://www.anglofareast.com/seminar-registration/ 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 The Silver Saver Program A unique silver savings program has been developed by trusted friends of Silver-Investor.com founder David Morgan, perhaps the world's best-known silver market commentator. In the Silver Saver Program you buy silver in select increments and at competitive prices. You enter the market through dollar cost averaging. The program is easy to start and is automatic but also easily modified if you wish. Your silver can be delivered to your door. If the program no longer meets your needs, you can stop at any time. "This program," Morgan says, "not only receives my full endorsement but also adheres to the tenets I set forth in 'The 10 Rules of Silver Investing' -- dollar cost averaging and putting real silver into your savings plan. "As an introductory promotion, if you decide participate in the Silver Saver Program, I will send you a free copy of 'Silver in the Next Decade,' one of the most important Morgan Reports I have written. And you will have the opportunity to read the Morgan Report free for 30 days. "Now more than ever it is important to accumulate physical silver and to stay informed on major economic developments. My reports cover money, metals, and mining, but I have always stressed the need to have physical metal. The Silver Saver Program will help you achieve a solid position in silver." For more information, please visit www.Silver123.net. If you would like to talk to someone about the Silver Saver Program, telephone our team at 785-727-2277.
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| Has Gold Become A New Reserve Currency? Posted: 09 May 2010 01:13 PM PDT Has Gold Become A New Reserve Currency?  For decades, the U.S. dollar has been the reserve currency of the world. This has given the United States an extraordinary amount of economic power, but as the U.S. economy has started to come apart over the past decade, other nations have increasingly sought to move away from the U.S. dollar and find other alternatives. For a long time it was thought that the Euro would become the next great reserve currency of the world. However, the recent Greek debt crisis, along with massive financial instability in nations such as Portugal, Spain and Italy, has caused investors to rapidly lose confidence in the Euro. In fact there are even some whispers that the Euro may not even survive the sovereign debt crisis as it sweeps across Europe. With both the U.S. dollar and the Euro looking shaky, investors have been searching somewhere safe to put their money. Increasingly, they have been turning to gold. So has gold now become a new reserve currency? Will all of this new demand drive the price of gold into unprecedented territory? Well, the truth is that as long as paper currencies around the world continue to show instability, gold will continue to be a preferred choice. Nations all over the world are looking for ways to diversify their very large foreign exchange reserves. For example, China now has approximately $2 trillion in foreign exchange reserves, and has been wanting to reduce its position in U.S. dollars for quite some time now. But where should they put their money? The Euro is coming apart like a 20 dollar suit. There is a very real fear that Greece is only the first domino to fall and that soon nations like Italy, Spain and Portugal will be begging the IMF for assistance as the sovereign debt crisis sweeps across Europe. Well, what about the British pound? The truth is that the pound is not very appealing right now because the U.K. is facing a massive government debt crisis as well. In fact, Bank of England governor Mervyn King recently warned that public anger over the "austerity measures" that soon must be implemented in the U.K. will be so intense that whatever party wins this election will be out of power for a generation. Well, how about the Japanese yen? Ironically, there has been a move towards the Japanese yen in recent days, but the truth is that the Japanese debt situation is one of the worst in the world. Japan's gross public debt has reached 201 percent of GDP and Japan's battle with deflation dragged into its 13th straight month in March. No, the yen is not safe at all. So does that bring us back to the U.S. dollar? No. There is a reason why nations all over the world have been wanting to get out of the U.S. dollar. The United States has piled up the biggest mountain of debt in the history of the world, and even official U.S. government reports admit that the U.S. government is on a financial path that is not even close to sustainable. The U.S. economy is caught in a death spiral, and that makes the U.S. dollar very unsafe. So, what is safe at this point? Well, gold is. The price of gold rose to $1,210 an ounce on Friday. The terms "flight to quality" and "safe haven" are increasingly being used for the precious metal as investors flee all of the major global paper currencies. Just consider some of the recent comments about gold by financial experts that have shown up in the news.... Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago: "The sovereign-debt panic is spreading and forcing a flight to quality into gold." Citigroup analyst David Thurtell: "Gold is now enjoying safe haven status, partly because bonds, particularly peripheral euro zone government and bank paper, is no longer a safe haven." Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter: "There is a clear flight into quality to the gold market as frightened capital seeks a haven of any sort while confusion reigns." So will this move towards gold continue? Sure. Although anyone who follows the gold market knows that big financial institutions regularly work to suppress the price of gold. In fact, one industry insider recently decided to be a whistleblower and came forward with "smoking gun" evidence of price manipulation in the precious metals markets, but the CFTC didn't do a thing about it. Fortunately, the overwhelming demand for gold is now pushing the price up despite efforts to suppress it. In addition, once it becomes apparent that most of the "gold" that is traded in the world is not backed by the actual metal itself, the price of gold will go even higher. For years, almost everyone has assumed that the London Bullion Market Association (LBMA), the world's largest gold market, had actual gold to back up the massive "gold deposits" at the major LBMA banks. But that is just not the case. People are now starting to realize that there is very little actual gold in the LBMA system. When most people think they are buying "gold", what they are actually buying are just pieces of paper that say they own gold. Egon von Greyerz of Matterhorn Asset Management in Switzerland recently elaborated on this point. He says that "a lot of people who have studied it closely are convinced that there is a major shortage in physical gold at LBMA. LBMA trades around 700 tons net of gold daily. That is 25% of world annual production and around $6 trillion annually. To back that amount of trading on a 100% reserve ratio basis, it would need several year's production of physical gold, which they definitively haven't got." So what is going to happen when investors start demanding physical delivery of the gold that they purchase? It is going to create a huge mess. Needless to say, if you are investing in gold make sure that you take physical delivery of the gold. As the paper currenices all over the globe continue to unravel (as all debt-based paper currencies always do), all precious metals, including gold, will be increasingly in demand. In fact, the idea of gold being a "reserve currency" is not anything new. Gold has been a "reserve currency" for thousands of years, and those who understand history know that it will always remain one. http://theeconomiccollapseblog.com/a...serve-currency
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| Gold Forecaster – Gold at $1,200 Why and will it hold and rise? Posted: 09 May 2010 01:00 PM PDT From now on we believe that a growing number of weekly investment strategy meetings will recommend that a percentage of funds be held in gold for the long-term. This will ensure that the gold price will hold $1,200. Why, central bank demand alone is capable of ensuring that the gold price is underpinned. New buyers will have to pay a rising price.
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| Inflation; A positive development for the Astute Investor Posted: 09 May 2010 12:56 PM PDT By Sol Palha, Tactical Investor
When you see a worthy person, endeavor to emulate him. When you see an unworthy person, then examine your inner self. We all pretty much have felt the effects of inflation in one form or another. However, economists and the central bankers choose to define inflation as an increase in price of goods. This is a very clever way to actually hide what they are doing. If they are able to inflate the money supply but keep the cost of certain goods suppressed, mainly those that the average Joe uses everyday, they have more or less won; the simple reason being that the average person has come to view inflation in terms of rising prices. One mechanism to keeping the cost of common goods down is through the use of heavy subsidies. This is used everywhere in the farming sectors, Manufacturing and industrial sectors, etc. I will elaborate on this in more detail on a follow up essay as this would a deviation from the topic at hand. There are some incredibly positive attributes to inflation. As an investor/trader one should be interested in trying to find the best investment that takes advantage of this situation; in other words, the rate of return is several levels higher than the current rate of inflation.. The only problem with inflation is that, for the most part, the poor actually become poorer and the unprepared move down 1-2 ranks. That is why the saying originated the "poor become poorer and the rich get richer" while the middle class gets wiped out. Since we have greedy slugs at the helm of the banking system, their inflationary tactics are designed to produce unequal benefits. Normally, if one inflates and spreads the money equally there is no net change as the price of goods move in equal percentages to reflect this increase in the money supply. However the central bankers will have none of this. They seek to inflate as much as possible and redistribute as little as possible of the new money they have just created out of thin air. The net result is that if you are unable to see in which direction they are moving, you will simply be left paying the tab. Your purse that was once full is now ¾ full and the prices of goods have moved up unevenly. This is what is happening now. Manufactured goods are extremely cheap; yet the cost of most commodities has shot up significantly in the past few years. In many cities, the cost of a house is still beyond the reach of many, and this is after the housing crash. Salaries have not kept up with the level of monetary inflation. The only way people are able to buy houses is because of the low artificially controlled interest rates. These fools many a new buyer into taking a debt that he/she really does not have the means to pay of. However, despite all these negatives the astute investor can make a tremendous killing if they take a little time to look at what is going on. For example, the intelligent investor would have started to notice that prices of houses started to increase rather drastically towards the end of 1999 and early 2000. They would have also noticed that Gold actually broke its Downtrend in 2000. They would have noticed that basic raw materials broke their down trend in Early 2003. They would have also noticed the trend of printing more dollars, if they bothered to read what this new administration was proposing. So the middle class family could have taken a mortgage and bought one house as the price inflated, they could have possibly taken a loan on the existing house say at the end of 2000 or early 2001 and used it to buy a second home. They could have put some of their money into Gold bullion and a little into some gold stocks, many of which are up over several hundred percentage points, some are showing gains in excess of a 1000%. Let's now look at the true full range benefits of Inflation. In this world if you do not spend time educating yourself the price you pay is extremely high. If you thought education was expensive, try ignorance for a lifetime. Almost every Gold bug is secretly rooting for inflation. Why do I say this? If they are expecting Gold to reach 1300, 1500, 2000, etc they are rooting for inflation. Gold prices are one of the main indicators that there is something seriously wrong with the banking system and that the monetary supply is going out of control. In the later stages, the fear factor will kick in as everyone panics and looks for a way to protect their assets; this will drive the price of precious metals and other commodities to the moon. Those that have bought real estate are also secretly rooting for inflation, as they want the prices of their property to increase. If you really take the time to think about it inflation is very beneficial to the astute investor. Those that are investing in the stock market are also rooting for inflation. It is the free money policies that push people and business to risk more of their money in the market. Look at the present market, it keeps going higher and higher, but when you price it in Gold or any other strong currency it has done nothing. However, the astute investor could spot that the central crack head bankers were out of control and knew that not only would the price of Gold rise but there would be a rise in the price of general equities to. These prices increases have more than compensated for the inflationary practices of the central bankers. However the only ones who have benefited from this move are a small group of smart investors (investors who were smart enough to jump out of dollars and into commodities) and the cronies of the central bankers who were privy to this information, long before the Junkies, oops we mean central bankers decided to press the pedal to the metal and push the printing press into overdrive. When you think about it, life is nothing but one huge market place and in the end someone needs to lose in order for someone else to win. Not everyone can win and not everyone can lose. The sad part is that it takes a lot of someone's to lose to make one someone wealthy. The net effect is zero. Money is not really lost it simply moves from many pockets to a few large pockets. When the NASDAQ crashed everyone was made to believe that several trillion dollars of wealth were lost. That was and is a fat huge lie. Those trillions of dollars simply moved out from hundreds of thousands if not millions of pockets into a select few thousand pockets. It's a net 0 game. So when people scream about the negatives of inflation. They are doing so because they have not taken the time to educate themselves on the many tools that are available to protect themselves against this insidious disease. This once again brings life to the saying, "An Empty Tin makes the most Noise."
In spite of the cost of living, it's still popular. Kathleen Norris 1880-1966, American Novelist Do we condone inflation? No we don't. Do we really think it is something great? No we don't. However, what one thinks and what one can do become rich are two different things. The central bankers are not going to change; they have been doing this for far too long. . They are masters at this game, one day they will lose, but I might be dead and gone by then. So rather than screaming from the top of my lungs like an empty can about the negatives of inflation, we would rather be a silent and have our eyes on what the central bankers are doing so that we can position ourselves to take advantage of their dirty moves. We will leave the screaming to the "Empty cans"; they seem to have plenty of time on their hands. In the end, all that really matters is for one to find a way to take care of themselves and their loved ones. And if you take the time to educate yourself than you put yourself into the driver's seat inside of being locked up in the trunk. Make sure you learn the true definition of inflation, the effects of inflation, how the central bankers operate, and you can use this info to ride on their tail coats and increase your net worth in the process.
The best form of protecting oneself from the evils of inflation is to have a wide exposure to the commodities sector. One should definitely put some of one's money into Precious metals (bullion). Some ETF's that focus on commodities are SLV, GLD, GDX, MOO, COPX,PALL, CUT, USO, ETC
Next to inflation, majority rule is the most ingenious scheme ever contrived by government. Most people have never dared to question the basic morality or logic in the assumption that the majority should have power over the minority. A majority of the people in the South once believed in black slavery. Did that make it moral? A lynch mob is majority rule stripped of its fancy trappings and its facade of respectability. In a community where homosexuals outnumber heterosexuals, should the majority have the right to outlaw sex between married partners of the opposite sex? In a community where atheists outnumber non- atheists, should the majority have the right to outlaw the practice of religion? … a dictatorship allows only a small number of people to interfere with the rights of others, a democracy makes it possible for great numbers of people to impose their will on others — through the force of government. Is an act of aggression more right if carried out by the majority than by a dictator? Since approximately half the eligible voters vote this means that approximately 75% of the people are ruled by 25% of the people. Robert J. Ringer, American Writer
Disclaimer; We have positions in Gold, Silver and Palladium bullion. More articles from the Tactical Investor….
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| U.S. Dollar is the new ‘Tulip’ Posted: 09 May 2010 12:55 PM PDT By Jeff Nielson, Bullion Bulls Canada In 1593, a botanist named Carolus Clusius introduced the tulip plant to Holland, after bringing it back from a trip to (what is now) Turkey. The Dutch people first became enamored, and then obsessed with tulips – and the value of tulips soared in that society to absurd levels.
An article on this episode in history provided examples of how high the value of a tulip had risen. A rare "Viceroy" bulb could sell for the equivalent of $1200 USD today, while in a more-detailed, barter transaction, a bulb was traded for a bed, a complete suit of clothes, and a thousand pounds of cheese. While a very amusing anecdote; from an historical perspective, "Tulipmania" (as it was dubbed) is seen as an example of the first "asset bubble".
The value of tulips in Holland soared for over 40 years. Then, in 1637, a single publicized transaction failed to take place, when the buyer didn't show up to conclude the deal. Like they had suddenly removed a veil from their eyes, a "panic" ensued among the Dutch – as tulip-holders suddenly all wanted to exchange their tulips for assets with real value. Within a matter of days, the value of a tulip had shrunk to only 1% of its previous worth. Today, we can't help but ask the question: "what kind of fools could have believed that a tulip was an item of value?"
While this episode is illustrative with respect to asset-bubbles, it is an equally useful example of the life (and death) of a form of money. What is important to note about "Tulipmania" is that soon after this fad started, tulips were deemed to be "too valuable" to simply be stuck in the ground and allowed to bloom – because someone could steal them. Thus, "trade" in tulips was quickly replaced by simply trading tulip bulbs. In other words, the tulip bulbs became currency.
For those unaware of what a tulip-bulb looks like, the same article to which I referred earlier also mentioned an anecdote of a visiting sailor who mistook a tulip-bulb for an onion – and ate it. Thus, what was being used as money was something with absolutely no intrinsic value. Once the bulbs ceased to be used to produce flowers (because they were "too valuable"), they didn't even have any aesthetic appeal.
There was a second reason why this "currency" was doomed to fail, in spectacular fashion. Once the Dutch people acquired the knack for growing tulips, they could essentially be produced in infinite quantities. The Dutch people were about to learn an important lesson about money: in order for any form of money to hold its value over the long term, it must be "precious" or rare. More articles from Bullion Bulls Canada….
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| Mother’s Day Silver Dollar Commemorative Coins Approved in House Posted: 09 May 2010 12:54 PM PDT Coin legislation that has passed in the U.S. House of Representatives would mark the 100th anniversary of Mother's Day with up to 400,000 commemorative silver dollars.
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