Gold World News Flash |
- Europe: The Root of the Correction
- Banco Santander: A Contrarian European Bank Pick
- The Eurozone: Prolonging the Inevitable
- Can Financial Regulatory Reform Work?
- Where Is the Fed's Money?
- Charles Nenner on Euro 'Debtonation,' Deflation and How to Profit
- Northern Trust ETFs: Back for Round II?
- How Best to Use VXX and VXZ
- The VIX Term Structure and What It Says About Future Volatility
- Food Price Inflation to Spur Zombie Takeover
- Stocks Bull Market Hits Eurozone Debt Crisis Brick Wall, Forecast Into July 2010
- Banks dump Greek debt on the ECB as eurozone flashes credit warnings
- The Government as Identity Thieves
- Hourly Action In Gold From Trader Dan
- The Rise of Asia, The Fall of the Euro, A Silver Forecast and More!
- Éric Lemieux: New Golden Oldies
- Just Goldman?.. Military Madness Without End
- Location, Location, Location and Underwater Homes
- Why We Don't Need Central Banks
- LGMR: Gold "Well Positioned", Hits New Euro Record, as Oil Drops with Asian Stocks
- Pump Monkey .vs. Realist
- Heh Where's My Recovery (Empire Index)
- Markets Update 8:30AM EST
- Client Update – Silver Quest Resources, Batter Up!
- Jim?s Mailbox
- In The News Today
- Trader Dan Comments On Last Week?s COT Data
- The Wisdom of Ball and Chaining the Rating Agencies
- Will Sovereign Debt Contagion Cross the Atlantic to the U.S.?
- Coins Commemorative of 180 years of central banking, Poland
- 3 Trading Ideas / Key Levels for SPY, Crude Oil and Gold
- Path to Economic Recovery Filled With Lethal Obstacles
- The Responses to the Gulf Oil Spill and to the Financial Crisis Are Remarkably Similar ... And Have Made Both Crises Much Worse
- In the Shadow of the Volcano
- Wolves vs. PIIGS
- Pick Your Pension Poison?
- Gold Seeker Closing Report: Gold Ends Unchanged While Silver Falls Over 1.5%
- An update on the Gold Bull Market and the SP 500 Index
- How Can ANYONE Claim A Top In Gold
- Copper to Gold Ratio: RUN AWAY!
- Gold and Silver Update
- A Warning Shot Across Our Collective Bow
- “Panicking German dealers” on a “Gold Rush Frenzy”
- The Great Debate, Part I
- Complete Paulson Q1 Portfolio Update: Major Additions To Gold Exposure, New Casino Stakes, But What About CDS And Gamma?
| Europe: The Root of the Correction Posted: 17 May 2010 07:34 PM PDT As today is Norwegian Syttende Mai (Norwegian Constitution Day) I will start off discussing Europe (FYI: Norway is not part of the contagion fears or the EU for that matter). I have belabored my opinion that LIBOR probably won't rise very far, very quickly. What has happened? LIBOR has almost doubled during the past two months. However, this is not due to positive economic expectations (which would lead to Fed Funds rate increases), but it is due to jitters in the interbank lending market. Banks are less confident in lending to other banks, especially European banks. Could this trend continues? Sure, but I don't think LIBOR will move dramatically higher unless the contagion in Europe spreads. I think even the Ostriches overseas will get their heads out of the sand before it spreads that far. Complete Story »
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| Banco Santander: A Contrarian European Bank Pick Posted: 17 May 2010 07:24 PM PDT Glenn Rogers submits: Well, if you don't have enough excitement watching the markets these days then you should take up skydiving or stock car racing for a hobby. The threat of Greece melting down and taking the rest of Europe with it had the market on edge for weeks. When that was combined with some crazy trading error that sent the Dow down 1,000 points within 15 minutes on May 6, it was enough to shake the confidence of virtually any sane person. As in the movie Terminator 3, we are witnessing the rise of the machines. In only five years, total market volume generated by high frequency traders running computer algorithms has moved from 20% to over 70% of all trades. The question now is does this current crisis pass or is have we seen early warnings similar to those prior to the subprime meltdown? People who ignored those were punished unmercifully when global stock markets collapsed in the fall of 2008. Some readers may recall that many economists and most pundits were saying that the subprime mess was only a small part of the overall financial system and could be easily contained. Complete Story »
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| The Eurozone: Prolonging the Inevitable Posted: 17 May 2010 07:17 PM PDT Brian Rezny submits: The word drama comes from a Greek word that means "action". Well, the drama in Greece continued this week, and now the Greek government is considering action: Prime Minister George Papandreou said the country is open to possible legal action against U.S. banks for any role they may have played in the crisis. In question: whether investment banks manipulated Greek bond prices through credit default swaps (these are insurance against default). At this point, Greece has plenty of problems. But their big problem isn’t that banks bet against them, but that they have a soaring deficit (13.6% of GDP). Complete Story »
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| Can Financial Regulatory Reform Work? Posted: 17 May 2010 07:02 PM PDT Gary Greenberg submits: A most basic question being asked is whether there are any provisions in the financial regulatory reform proposal before Congress that would have prevented the current financial crisis had they been in effect ten years ago. While one can easily blame any combination of events or circumstances for the development of the credit bubble and its subsequent bursting, attempting to lay blame often results from a political agenda or simply from a desire to obfuscate so as to prevent any effective reform. Complete Story »
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| Posted: 17 May 2010 06:57 PM PDT Bob Mcteer submits: What am I missing? I keep hearing people on financial TV say things like “The Fed keeps pumping out the dollars,” “The Fed keeps monetizing the debt.” Then I go look up money-growth charts. I can’t find all this excessive money creation that is monetizing the debt and is about to create a breakout in inflation. Not M1; not M2. Complete Story »
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| Charles Nenner on Euro 'Debtonation,' Deflation and How to Profit Posted: 17 May 2010 06:53 PM PDT Cliff Wachtel submits: The latest EU and Euro travails got me thinking about my April interview with the prominent market technician Charles Nenner( see Charles Nenner's Trends and Trades: Investor's Roadmap for 2010-2011). I had asked about his thoughts on the deteriorating EU debt crisis. As noted in this article, while the former Goldman Sachs technical analyst is well known among the smart money and large institutions as one of the most important market researchers, many retail investors are not familiar with him. See this article for his background information. Nenner’s Forecasts On Target Complete Story »
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| Northern Trust ETFs: Back for Round II? Posted: 17 May 2010 06:52 PM PDT Michael Johnston submits: Northern Trust, the Chicago-based investment firm, filed last week for SEC approval on a line of ETFs. The filing didn’t include many details on specific funds, and represent one of the first steps towards bringing exchange-traded products to market. Northern Trust referenced plans for both equity and fixed income products covering the U.S. and international markets. If the idea of a Northern Trust ETF sounds familiar, that’s because the company has already dabbled in the ETF space once before. In January 2009 Northern Trust announced that it was closing the Northern Exchange Traded Shares (“NETS”) line of ETFs, citing “current market conditions, the inability of the Funds to attract significant market interest since their inception, their future viability as well as prospects for growth in the Funds’ assets in the foreseeable future” (see the full press release). Complete Story »
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| Posted: 17 May 2010 06:23 PM PDT Lawrence Weinman submits: What are the implications for the market outlook of the analysis in the previous post for the "real world" of the markets: Complete Story »
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| The VIX Term Structure and What It Says About Future Volatility Posted: 17 May 2010 06:00 PM PDT Lawrence Weinman submits: Judging by the CBOE website, there is considerable interest in the term structure of VIX futures measured as the difference between near term and further out futures on the VIX and also the realtionship of futures to the cash VIX. This can be a premium (contango) or discount backwardization., In fact there seems to be dispute even as to how to interpret that curve as the market predictor of future volatility. Complete Story »
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| Food Price Inflation to Spur Zombie Takeover Posted: 17 May 2010 05:58 PM PDT A recent email blared, "The National Inflation Association says there is reason for grave concern", to which I thought to myself, "Well, welcome to my world, chumps, because all I do is bewail the horrors of the coming inflation in prices that will follow such huge inflations in the money supply!" With such a dismissive attitude, you can tell that I was going to trash the email without reading it when, suddenly, I noticed that they used the word "grave", as in a hole in the ground where cemetery workers dump what is left of dead, emaciated bodies after the terrifying rise in prices, caused by massive creation of money by the Federal Reserve and jammed into the economy by the massive deficit-spending of the deplorable Obama administration, forcing people to live in abandoned buildings and eat various rodents and local flora, perhaps snacking on the occasional corpse, whereupon these people turn into raging zombies who hide by day and come out at night to kill people, splitting open the...
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| Stocks Bull Market Hits Eurozone Debt Crisis Brick Wall, Forecast Into July 2010 Posted: 17 May 2010 05:58 PM PDT Are the markets manipulated ? Are they ? You have been repeatedly told by those that clearly don't immerse themselves in trading on a regular basis that they are not manipulated instead the movements are a function of some ordered theory that implies certainty of outcome when all one can do in reality is to conclude towards a probability of outcome that are usually little better than 60/40, well on the 6th everyone got the answer that they should imprint into their memories that the markets REALLY ARE manipulated. If your going to learn one lesson from 2010 then let that be the lesson learned. Contemplate on it, let it sink in, let it skew how you interpret price action and maybe you too can join in on future market manipulations! Stock market volatility soars, the Flash Bounce follows the Flash Crash, the manipulated markets are not giving investors and traders time to react as the dark pools of capital continue to rake in huge profits by circumventing official exchang...
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| Banks dump Greek debt on the ECB as eurozone flashes credit warnings Posted: 17 May 2010 05:58 PM PDT May 17, 2010 09:57 AM - Foreign holders of Greek and Portuguese debt exit their positions, leaving eurozone taxpayers exposed to the credit risk. Read the full article at the Telegraph......
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| The Government as Identity Thieves Posted: 17 May 2010 05:58 PM PDT The spotlight remains on the Greek sovereign debt crisis as the riots continue. The terms of the Greek bailout from the IMF and Eurozone countries remain contentious with citizens on all sides. Europeans hate having their governments throw public money away as much as Americans do. The Greeks are not happy about having their taxes raised while their pensions and salaries are cut. Meanwhile, it is rumored by the Financial Times, AFP and others that Greece may spend more than it saves from austerity measures on arms deals with Germany, France and the US as a potential condition of receiving bailout funds. If true, it is certainly not unprecedented for the global military industrial complex to benefit from deals made by their friends in the central banking community. After all, war is the health of the state. The last thing big government proponents want is for peace to break out in the world. This free flow of fiat money from around the globe to...
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| Hourly Action In Gold From Trader Dan Posted: 17 May 2010 05:58 PM PDT View the original post at jsmineset.com... May 17, 2010 10:10 AM Dear CIGAs, The big story is once again the collapse in the Euro – it actually registered some prints BELOW the worst levels seen back in late 2008 at the height of the credit crisis inception here in the US. It looks to me like the only ones seeing "Shock and Awe" are the European monetary authorities who today look like total buffoons after all their grandiose comments that were uttered when they first announced that they would defend the Euro at all costs. The phrase, "at all costs," is going to be taken literally. What are they going to try next, direct intervention in the Forex markets? That ought to be good for at least a one day pop before the sellers smash it lower again as it would rightly be seen as an act of desperation. The result of this – Euro priced gold missed the magical €1,000 mark at today's PM fix by less than 2 euros as it made a brand new all time high again. That did not seem to deter the bullion...
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| The Rise of Asia, The Fall of the Euro, A Silver Forecast and More! Posted: 17 May 2010 05:58 PM PDT The 5 min. Forecast May 17, 2010 11:20 AM by Addison Wiggin & Ian Mathias [LIST] [*] The first dispatch from our Chinese investment expedition [*] Market issues vote of no confidence for global debt crisis… our thoughts, and target prices, for the euro [*] Bill Bonner on why some fiscal rescues work… and why Europe’s won’t [*] Which nations (or states) are next? Two charts weigh in [*] “What about silver?” a reader asks. Our latest take on the “poor man’s gold” below [/LIST] So over the weekend, we figured it out: Get on a plane in Washington, D.C. Fly 14 hours over the polar ice cap. Touch down in Beijing. Tack on 12 hours for the time change… and bingo, you are 26 hours in the future. 5 Min. Forecast? Forget about it. We’re already here. A full day ahead of schedule… “It’s amazing what a few years of 10% compounded returns can do,...
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| Éric Lemieux: New Golden Oldies Posted: 17 May 2010 05:58 PM PDT Source: Brian Sylvester and Karen Roche of The Gold Report 05/17/2010 When The Gold Report last interviewed Laurentian Securities Analyst Eric Lemieux, he talked about his favorite explorers, especially in the James Bay area, with its exploration plays and favorable geological, geographic and social fundamentals. Eric is back with more on Canada's junior gold sector in this exclusive interview. The Gold Report: What are Laurentian Securities' short- and long-term projections for the gold price? Éric Lemieux: Laurentian's short-term price forecast for 2010 is in the range of $1,150 per ounce. This will increase slightly in 2011, remain the same in 2012, and then decrease. We basically did a yearly forecast 'til 2014. In 2015, our long-term gold price is in the range of $900, which I believe is above consensus. I believe it's a fair price. We are gold bulls "light," if you like. TGR: What are some factors that you believe are going to lead to a decrease in the pri...
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| Just Goldman?.. Military Madness Without End Posted: 17 May 2010 05:58 PM PDT Just Goldman? Monday, May 17, 2010 – by Staff Report Lloyd Blankfein An Updated List of Goldman Sachs Ties to the Obama Government Including Elena Kagan ... This essay shows the pervasive influence of Goldman Sachs and its units (like the Goldman-Robert Rubin-funded Hamilton Project embedded in the Brookings Institution) in the Obama government. These names are in addition to those compiled on an older such list and published here at FDL. In the future, I will combine the names here and those on the earlier article but I urge readers to look at the earlier list too (links below). Combined, this is the largest and most comprehensive list of such ties yet published. For readability and clarity, I have NOT included many of the details and links that are found in the earlier article so as to make this one less repetitive and easier to read. So, if you want more documentation, please look at my earlier diary here at Firedoglake called "A List of Goldman Sachs...
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| Location, Location, Location and Underwater Homes Posted: 17 May 2010 05:58 PM PDT The latest data from First America CoreLogic for the first quarter of 2010 has been graphed by Calculated Risk: Note: Data for Louisiana, Maine, Mississippi, South Dakota, Vermont, West Virginia and Wyoming were not available for the graph above. A total of 11.2 million homes are underwater, owing more mortgage principal than current market value. An additional 2.3 million mortgages had less than 5% equity. When you recognize that closing costs for the seller are often 6% or more (mainly realty commission and home inspection and code violation correction expenses), these 2.3 million "near" properties also actually need self-contained breathing apparatus. Underwater Does Not Necessarily Equal Eventual Default The total of negative equity properties, if sold, is 13.5 million homes. That is 28% of all mortgages. But this doesn't mean that most will default. A lot depends on the economy. If the economy strengthens and the recovery becomes even modestly rob...
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| Why We Don't Need Central Banks Posted: 17 May 2010 05:58 PM PDT Lars Schall of MMNews Germany has recently interviewed many outspoken critics of the inner workings of our global financial system including former Federal Housing Commissioner and Solari Inc. President Catherine Austin Fitts and Associate Professor of Economics and Law at the University of Missouri, Kansas City [UMKC] William K. Black. Below is my recent interview with Mr. Schall. “We Don’t Need Central Banks”, by Lars Schall, MMNews Mr. Kim, in your point of view our current fiat money system does not only belong to the root causes for the financial / economic crisis we’re going through, but also that it is fraudulent per se. Why so? Well, the reason I believe it’s fraudulent is because our current money system is a system that creates money as debt. If we had no debts in our global monetary system, no money could exist. That’s a fairly ludicrous concept if you think about it. It’s also a system in which centra...
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| LGMR: Gold "Well Positioned", Hits New Euro Record, as Oil Drops with Asian Stocks Posted: 17 May 2010 05:58 PM PDT London Gold Market Report from Adrian Ash BullionVault 09:40 ET, Mon 17 May Gold "Well Positioned", Hits New Euro Record, as Oil Drops with Asian Stocks THE PRICE OF GOLD in London's wholesale market slipped 1.2% from an early gain vs. the Dollar on Monday, touching new record highs for Euro and Sterling investors as Asian stock markets closed the day sharply lower. European stock markets rallied as the Euro currency bounced from a new 49-month low at $1.2240. Crude oil fell towards fresh 3-month lows against the Dollar at $71 per barrel, taking its losses for May-to-date to almost 18%. "Gold [on Friday] achieved its seventh up-week in the past eight weeks," notes the latest technical analysis from bullion bank Scotia Mocatta. "The top of the two-year bull channel comes in today at $1352. The higher highs and higher closes keeps the risk to the topside." "Gold holdings by physically-backed ETFs climbed 44 tonnes in the past week alone, reaching 1,792...
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| Posted: 17 May 2010 05:58 PM PDT Market Ticker - Karl Denninger View original article May 17, 2010 07:43 AM An interesting pair of opinion pieces on Bloomberg today..... First the realist perspective: [INDENT] But the story doesn't end here. The fatal flaw in the plan is that the European nations bailing out Greece -- even Germany, where government debt has risen to about 80 percent of gross domestic product -- have similar budget problems and even less political will to take similar medicine. Their plan appears to rest on the hope that lenders won't notice. Eventually they will, and when that happens, a worldwide loss of faith in government debt markets is a virtual certainty. [/INDENT] Right. Bailing out a bankrupt nation by even more bankrupt nations, where nobody actually has any money but all believe that if they sing "Kumbaya" around the fire someone (China?) will magically rise to give them money on "attractive" lending terms. Why would you do that if you have basically no chance of ever ...
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| Heh Where's My Recovery (Empire Index) Posted: 17 May 2010 05:58 PM PDT Market Ticker - Karl Denninger View original article May 17, 2010 05:10 AM Brace for impact! [INDENT] *U.S. EMPIRE STATE FACTORY INDEX AT 19.1 IN MAY, FED SAYS *U.S. MAY EMPIRE FACTORY INDEX COMPARES WITH FORECAST OF 30 *U.S. MAY EMPIRE FACTORY FUTURE INDEX AT 42.1 AFTER 55.7 *U.S. MAY EMPIRE FACTORY EMPLOYMENT INDEX AT 22.4 AFTER 20.3 *U.S. MAY EMPIRE PRICES-PAID INDEX AT 44.7 AFTER 41.8 *U.S. MAY EMPIRE FACTORY SHIPMENTS INDEX AT 11.3 VS 32.1 *U.S. MAY EMPIRE FACTORY NEW ORDERS INDEX AT 14.3 AFTER 29.5 *U.S. EMPIRE STATE FACTORY INDEX AT 19.1 IN MAY, FED SAYS [/INDENT] From Marketwatch: [INDENT] The bank's Empire State Manufacturing index decelerated to 19.1 in May from 31.9 in April. The drop suggests the pace of growth slowed in May. New orders and shipments moved lower but remained in positive territory. [/INDENT] Yeah, way down from estimates. Prices paid up, shipments collapsing (ONE THIRD of projected), new orders collapsing (HALF of projected) and future expecta...
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| Posted: 17 May 2010 05:58 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here May 17, 2010 04:34 AM As we begin the week, please allow me to make a short update. U.S. Stock Market -This week’s trading should go a long way in telling us if this was yet just another correction/consolidation in this bear market rally or they indeed rang a bell. Because I’ve thankfully not mistaken just noise as a bell for well over a year now, my bear suit remains in the closet (but I do visit it from time to time and remind it how much I still love it). Gold – I’ve stated over and over again for years that we’re experiencing the “mother” of all secular gold bull markets. But into every mega bull market comes periods of corrections (often short but sharp) and consolidations (new base-building at new higher levels). I noted late last Wednesday evening with gold at $1,236, my technical work was suggesting a minimum consolidation period du...
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| Client Update – Silver Quest Resources, Batter Up! Posted: 17 May 2010 05:58 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here May 17, 2010 04:03 AM Silver Quest has been working quietly away building for a busy summer, filled with exploration programs.* Last week, Silver Quest announced that they will be increasing their interest on the Capoose Property to 100%, following a decision by their partners, Bearclaw Capital who declined to participate in the $2.2 million proposed exploration program due to lack of funding.* Throughout the summer Bearclaw's interest will be reduced and will be converted to a 2.25% NSR leaving 100% of Capoose to Silver Quest.* While increasing their interest in Capoose, Silver Quest's partners are working hard to do the same on the Davidson property.* Drilling on Davidson has already begun and is being run and paid for by Silver Quest's partners, Richfield Ventures.* Also in the planning stages for this summer is exploration program on the Boulevard Property in the Yukon. Davidson ...
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| Posted: 17 May 2010 05:58 PM PDT View the original post at jsmineset.com... May 16, 2010 12:23 PM Jim, Perhaps many intelligent German people studied the history of Weimar hyperinflation that occurred in 1923. The printing presses like those today went out of control sending the price of gold to the stratosphere as paper dollars became useless! CIGA "The Gordon" More Jim, This will not be unfamiliar to you but it will be to many. It is a bit of an insider's look, a confession, on the world of banking gone mad. It is a well done piece and one that many should see – especially those who still trust the system. Regards, CIGA Chad...
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| Posted: 17 May 2010 05:58 PM PDT View the original post at jsmineset.com... May 16, 2010 06:10 PM Dear CIGAs, CIGA Eric makes an excellent point. Think about the process and understand there has never been a more powerful tool to manipulate markets than the invention of the OTC credit default swap. Fiat currencies will always be with us, but gold stands heads above paper money in the coming generations. "Germany pulls out, and it’s over for fiat." –CIGA Eric, May 16th 2010 Jim Sinclair’s Commentary This illustration says it all. Add every other country in the Western world, because one by one they will all be chewed up in the process. Jim Sinclair’s Commentary The article has only one major soft point. "America has time," yes, but not much time. The dollar dies the day the euro fails as a union currency. US faces one of biggest budget crunches in world – IMF By Edmund Conway Business Last updated: May 14th, 2010 Earlier this week, the Bank of England Gov...
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| Trader Dan Comments On Last Week?s COT Data Posted: 17 May 2010 05:58 PM PDT View the original post at jsmineset.com... May 17, 2010 12:29 AM Dear Friends, This past week's Commitment of Traders report shows what pretty much can be expected when it comes to gold although with one minor exception. The Producers/Merchants/Processors/Users category continues to increase their net short position to a record level while the managed money and the other large reportables, along with the general public, continue to pile onto the long side. None of these categories has exceeded the peak levels of the past. The exception noted above is the Swap Dealers category, which, in a continuance of their actions the previous week before this, went the other way of the Producer/User class and actually decreased their net short exposure. This bears watching although it is too early to make any definitive analysis yet but they generally march in lock step with the big Producer/users category when it comes to gold as a quick examination of the chart reveals. This divergence might ...
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| The Wisdom of Ball and Chaining the Rating Agencies Posted: 17 May 2010 05:56 PM PDT Wade Slome submits: After sifting through the rubble of the financial crisis of 2008-2009, Congress is spreading the blame liberally across various constituencies, including the almighty rating agencies (think of Moody’s (MCO), Standard & Poor’s (MHP), and Fitch). The Senate recently added a proposed amendment to the financial regulation bill that would establish a government appointed panel to select a designated credit rating agency for certain debt deals. The proposal is designed to remove the inherent conflict of interest of debt issuers – such as Goldman Sachs Group Inc. (GS), Morgan Stanley (MS), UBS (UBS), and others – shopping around for higher ratings in exchange for higher payments to the banks. The credit rating agencies are not satisfied with being weighed down with a ball and chain, and apparently New York Attorney General Andrew Cuomo is sympathetic with the agencies. Cuomo recently subpoenaed Goldman Sachs Group Inc., Morgan Stanley, UBS and five other banks to see whether the banks misled credit-rating services about mortgage-backed securities. Complete Story »
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| Will Sovereign Debt Contagion Cross the Atlantic to the U.S.? Posted: 17 May 2010 05:36 PM PDT
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| Coins Commemorative of 180 years of central banking, Poland Posted: 17 May 2010 05:34 PM PDT Nice 2009 coins from Poland commemorating 180 years of central banking. Of course they are in gold and silver. So, they'll still be valuable long after their fiat is dust. http://www.forum10.pl/180-lat-bankow...lsce-t-18.html Four coins down in this list: http://en.wikipedia.org/wiki/Commemo...f_Poland:_2009
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| 3 Trading Ideas / Key Levels for SPY, Crude Oil and Gold Posted: 17 May 2010 05:16 PM PDT Scott's Investments submits: Below are 3 potential key levels and/or trade ideas on the S&P 500 (we can use SPY as a proxy), Gold (using GLD as a proxy), and the June Contract for Crude Oil. Each trade has a brief video with charts from MarketClub's Adam Hewison. I have summarized the trades and strategies below: Complete Story »
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| Path to Economic Recovery Filled With Lethal Obstacles Posted: 17 May 2010 04:50 PM PDT We just stepped off the plane... We'll have to catch our breath and open our eyes before we have anything to say about China... In the meantime, let's look back at what is happening in Europe and America. And we will begin by thanking Paul Krugman, economiste ordinaire at The New York Times. Sometimes, in the dark of night, we are haunted by demons of doubt and worry. Especially when we're alone. And far from home. Maybe we're wrong. Maybe we're leading thousands of loyal Dear Readers astray. Maybe the Great Correction isn't what we think it is. Maybe deficits are good. And maybe the US will never run itself into the Greek-style yoghurt. What a relief it was to find Krugman in today's International Herald Tribune! Naturally, Krugman disagrees with us completely. Which puts our mind at ease. If Krugman agreed with us, we'd have to re-think our position. "America is not Greece," he says. So far, so good. His geography is correct. It is all downhill from there. Krugman won a Nobel Prize for his early work. Which makes us wonder about the Nobel committee. The US is running about the same size deficit as Greece; but don't focus on that, says Krugman. The two places are not the same, he insists. Because the US has a "much lower debt level." He's wrong about that. If you add to the US national debt the debts of Fannie Mae, GM, and all the other financial holes, which the government will ultimately have to fill, the crater is about 120% of GDP - the same as Greece's debt. "Even more important," he writes, "is that we have a clear path to economic recovery." Oh. Where's that? As near as we can tell, the path is twisty, poorly lighted and full of lethal obstacles. There are now nearly as many people relying on the US government for food as the entire population of Spain. There are about as many people unemployed in the US as the entire populations of Greece, Portugal and Ireland...combined. And there are as many people who have gotten negligible income gains as...well...the entire population of America. Without more income, how can Americans increase spending? Without more spending, how can the economy really grow? The government can do the spending! Well, good luck with that. Already, the return on additional borrowing in the private sector is so marginal that banks are generally unwilling to lend. And the return on government debt? It looks like a positive return, at first. People spend transfer payments just like any other money. Economists like Krugman can't tell the difference. But government spending generally produces negative real growth. Nevertheless, Krugman explains that IF the economy improves...and IF the administration cuts deficits...and IF the new health care program doesn't cost more than the Obama team says it will - heck...everything will work out just fine! With a few tax increases, of course. Then, he tells us that, yes, over the long run we're going to hell in a handcart. But that problem can be solved by a "combination of health care reform and other measures." Finally, he's right about something. Enough 'other measures' and you've got the problem licked. What other measures? Well, the deficit is now at about 10% of GDP. So, all you've got to do is to cut spending by 11% of GDP and you've got a surplus. Let's see, where are we going to cut $1.4 trillion dollars? That's cutting out 100% of the defense budget. And 100% of Social Security too. And if you don't do that...you get more deficits. And if you get more deficits, you end up with more debt. And if you keep adding debt faster than real GDP growth, you eventually get to the point where the markets cannot or will not finance it. And then you're Greece. What is likely to happen is that yields will stay low enough for long enough to make people think Krugman knows what he is talking about. They'll think that the US can borrow as much as it wants for as long as it wants... In The Washington Post, economist James Galbraith is already a believer. He argues that the chance of getting into a Greek-style jamb is "zero." He says deficits don't lead to trouble. The US has been running deficits since the '70s, he points out. And look at the Japanese, he adds. They've been running huge deficits (fiscal stimulus) since their economy slipped up in 1989. And they're still able to borrow at practically zero interest. Makes you wonder how Greece got into trouble. It ran plenty of stimulating deficits. Then again, everything was all right in Greece until it wasn't. A man jumped off the 65th floor of a skyscraper. As he went by the 11th floor, the secretaries heard him remark: "All right so far." The US is all right so far. So is Japan. And more thoughts... - Deep Do-Do Horizon "Following the Gulf disaster...it will be a long time before any new permits are issued for drilling for oil in the Gulf..." said Rick Rule, at the Family Office get-together this weekend. And this from Bloomberg:
"This oil spill could destroy the future of offshore drilling," adds our Family Office researcher, Charles Delvalle. "More states will be allowed to decide whether they want drilling offshore or not. And Senators are trying to allow neighboring states to have a 'veto' over any one state's offshore drilling decision. "So let's say Florida wanted to put some offshore rigs up close to Georgia. If Georgia doesn't want that rig up, it can 'veto' Florida's decision." Daily Reckoning readers can see where this is going. Even if the oil were available beneath the sea, the oil industry is going to have more and more trouble bringing it to market. Rick notes that even on dry land, the oil industry is facing disasters. A number of major exporters - Mexico, Iran, Venezuela and Peru - could take themselves out of the export business in the next few years, he says, thanks to their habit of using oil revenues for social/political purposes and failing to invest in additional capacity. This is occurring as the number of cars - and the demand for energy - is exploding. Implication: a higher oil price. "There's plenty of $200 oil," said Rick. Trouble is, there isn't that much $70 oil. Regards, Bill Bonner
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| Posted: 17 May 2010 04:41 PM PDT
The Gulf oil spill and the financial crisis were both caused by excessive risk-taking by industry giants and the "capture" of politicians and regulators by the corporate behemoths. Moreover, the response to the Gulf oil spill and the financial crisis are remarkably similar. With regards to the financial crisis, the response has been to cover up the truth:
The same is true for the Gulf oil spill. As ABC News notes, the White House allowed BP to suppress video of the oil spill for 3 weeks; and a top oil spill expert says that BP's use of booms around the spill site now won't really do anything ... and is just an exercise in public relations so that it looks like it's doing something. BP is also using dispersants to hide the extent of the oil spill. Specifically, as many commentators note, the dispersants cause much of the oil to sink, so that it appears that the spill isn't that big. But the dispersants are not only highly toxic, but will also probably make the damage from the oil itself even worse. Moreover, just as the cover-up about the severity of the financial crisis has allowed Larry Summers, Tim Geithner, Ben Bernanke and most of Congress to kill real financial reform, BP and the government's drastic underplaying of the size of the spill has allowed BP to skate by without taking emergency actions, such as bringing in booms on an emergency basis, or to undertake more pro-active and creative responses.
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| Posted: 17 May 2010 04:40 PM PDT It will be a thoughtful reckoning today. Put on your thinking cap. There is a lot to think about. What exactly is going on in the world and what, if anything, can you do about it? Let's start with China, where Shanghai stocks fell 5.1% yesterday and are 26% off the index's 52-week high. If Chinese stocks are leading the economy, one crash is in and another could be just beginning. About the only bright side of predicting a crash in Chinese construction and real estate spending is that it's a run-of-the-mill kind of crash and not a systemic failure. That might not sound positive. But it is. It means that while the pain of China crash would be sharp and probably not short, it wouldn't be the end of the world. Just the end of the world as we know it. And that would be fine too. Because over the next few decades, you get the sense that the balance of economic power in the world will have decisively shifted. It's shifting away from the over-indebted industrialised Western Welfare States and toward the higher-saving nations of the developed world. Back a few years ago, we called this The Money Migration. And our view then was that this shift favoured Australia, despite Australia's own massive private debt levels. But who knew that so much paper money would be destroyed in transit between points A and B? Markets in Europe and the Americas were again indifferent yesterday. It's like investors can't quite believe that you're actually watching a junior reserve currency (the euro) slowly take off its shoes and socks and lower its dishevelled self into its deathbed. Can this really be it for the Euro? Well, there is always the possibility that reports of the euro's demise are simply being exaggerated. That's the 24/7 news media cycle works these days. Everything is a crisis all the time, especially right now. A lot of what passes for urgency is just manufactured panic. Despite the theatrics, though, there's something rotten at heart of the currency. The real problem for the Euro is that it is the unbacked liability of a political union that is slowly unravelling. It must be unthinkable for the planners and bureaucrats of Europe to imagine the economic landscape without a common currency. But they better start thinking fast and printing D-marks. This must be what it's like to live in the shadow of a dormant volcano. You plant a colourful green garden in the fertile soil and live on the gentle slopes and pass your days quietly. And then one fine day you are erased from existence in the time it takes to scratch your nose by a searing hot pyroclastic flow. Game over. Except, switching metaphorical gears, we have always known a global financial system built on debt was an active volcano capable of blowing at any time. Throwing virgins into the crater to appease the gods - like throwing Fed money onto bank balance sheets - is not a realistic survival strategy. Virgins don't prevent volcanic eruptions and more money doesn't improve bad debts. So what IS a realistic survival strategy? Well, the conventional wisdom - and we say this not really knowing what conventional people think - is probably to not try and time the market, to have a diversified portfolio with an asset allocation strategy designed to suit your risk and your financial goals, and to let time do your work for you, with annual rebalancing to make sure you are not over-exposed or under exposed to any particular asset class. That's how they write it up in the textbooks. For most of the last twenty years, that strategy has worked. But will it keep working in a world where you may see de facto default by sovereign governments or, if they manage to avoid that, massive inflation? What do you reckon? Meanwhile it is beginning to dawn on more people that the Rudd government has introduced its resource rent tax at almost the worst time imaginable for the Aussie share market. China's banks are being instructed to tighten lending. This ought to reduce the demand for base metals used in China's infrastructure and housing industries. Base metals prices are falling. Yet in this environment the government has submitted a budget which assumes perpetual boom times in the resource patch and projects a surplus based on a big tax it hasn't yet passed. If you have some time today, make sure to read this article by Business Spectator's Robert Gottliebsen in which he warns of a looming 'capital strike' by the mining industry. A 'capital strike' sounds like something out of Atlas Shrugged doesn't it? Wealth producers of Australia unite! And do nothing! You have nothing to lose but the profits the government was going to take from you anyway. The government seems to believe that the miners will still develop project in Australia under the new regime. Why the miners would do this when there are other projects in other countries, well, we don't know. But the bottom line is that nearly $100 billion in mining projects may get shelved as a result of the tax. You might be of the opinion that this is a good thing; that accidentally the government has done the right thing by slowing down the development of Australia's resources so they can be managed more deliberately and for the greater good. That would make you a communist. And besides, it's a pretty risky and presumptuous gamble to say that you can handle an entire industry like a finely tuned automobile, or that you know how to run it better than the people who actually run it for a living. In any event, it looks like a bigger battle is brewing between the industry and the government. From an investment perspective this is a massive negative for Australian stocks. It introduces a huge amount of uncertainty. And in that environment, no one wants to take many risks. However, as our mate Kris Sayce pointed out in the note we sent you yesterday, the only good news is that when the playing field is deserted, you have it all to yourself. And if you preserve your capital in the big corrections, you can pick and choose the projects you want to invest in, usually at a cheaper price. At least that's how it worked for Kris in2008. Frankly, we're not sure how anything's going to work the rest of the year. The sun will come up. It will go down. But in the hours between, what happens next is anyone's guess. Stay tuned. Dan Denning
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| Posted: 17 May 2010 04:33 PM PDT
From The Daily Capitalist This is another sad tale of shooting the messenger. Without fail, governments always blame speculators for their economic woes. I can't think of a time when that has not occurred. In fact our own government is engaging in the same thing. Speculators are called "wolves," "jackals," "parasites," and even "capitalists" on occasion. But for Mr. George Papandreou to have the gall to blame the wolves for Greece's problems is not only an outrageous lie but is a display of ignorance. One could correctly conclude that he is just another slimy politician trying to hold on to power. Here's what he said on "Fareed Zacharia GPS" on Sunday:
That is pathetic. They've never lived up to their responsibilities, they have defaulted before, and I believe they will default again. Mr. Papandreou and his (and his father's) socialist PASOK party (Panhellenic Socialist Movement, or Panellinio Sosialistikó Kínima) were responsible for the massive spending and welfare programs that are now hobbling Greece. Let's back up a moment and learn a bit about the Papandreous, father and son. Father Andreas was the son of Geórgios, a leading political figure prominent in the anti-monarchist movement. In the Sixties he was premier and espoused many socialist policies. He was supported in his cabinet by his son Andreas. A military coup kicked George and his son out and ruled until 1974 which is when Andreas founded PASOK. Andreas was premier during much of the 1980s and 1990s until he died in 1996. Andreas was responsible for most of the socialist policies that included national health care and generous pensions and benefits. They paid for them by running deficits and borrowing the money. Andreas was also very anti-American, disliked the U.S.'s influence in the world and wanted U.S. bases in Greece closed. According to the Wikipedia article, he said that the "USSR is not a capitalist country 'one cannot label it an imperialist power.' According to Papandreou, 'the Soviet Union represent[ed] a factor that restrict[ed] the expansion of capitalism and its imperialistic aims'. There's an enlightened man. I should say that father and son are U.S. citizens. Andreas was kicked out of Greece by the dictatorship in 1938 and landed in the U.S. and got his Ph.D in economics at Harvard in 1942. In 1943 he joined the Navy and served as a nurse during the War and became a citizen. After the War he taught economics at the University of Minnesota, Northwestern University, the University of California, Berkeley (where, fittingly, he was chair of the Department of Economics), Stockholm University and York University in Toronto. Son George (known as Giórgos, to distinguish him from his grandfather Geórgios) was born in St. Paul, Minnesota in 1952. George speaks perfect American English. He was educated at "Amherst College in Massachusetts, Stockholm University, the London School of Economics and Harvard University. He has a Bachelor of Arts degree in sociology from Amherst and a Master's degree in sociology from the LSE. He was a researcher in immigration issues at Stockholm University in 1972-73." In 2006 he became president of the Socialist International, whose members consist of socialist parties around the world (for an interesting list, see here). In 2004 and again in 2009 Giórgos was elected premier. The Papandreou family doesn't understand a thing about economics. Giórgos might know a bit of Keynes, but I can assure you has has no real knowledge of classical liberal economics, much less Austrian theory. In other words, a whole intellectual movement which challenges his socialist ideas has eluded him. This is especially significant in light of the drastic failures of socialist economies. I can assure you that many, if not most Austrian theory economists have an excellent working knowledge of socialism. We all know that politicians scapegoat others to evade responsibility for their mistakes. So they go after speculators. Any claim that speculators are responsible for Greece's woes is a lie. What speculators do is seek and find the true(r) values of overvalued assets. They can make good money doing this and they should. If it weren't for the wolves, we ordinary investors might be suckered into buying these overvalued assets. The quicker it's done, the better it is for the markets because it prevents the misallocation of capital which would be otherwise used to invest in productive assets. For the weeks before the EU adopted the €750 billion bailout speculators were hammering the euro, Greece's bonds, and European banks who were big lenders to the PIIGS. The politicians didn't like this revelation of truth:
And it is not over. The wolves are back at it. An article in Bloomberg today shows that the market doesn't trust the politicians:
The wolves are correct. The market will eventually reveal the truth.
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| Posted: 17 May 2010 04:19 PM PDT
Norma Cohen of the FT reports, Study sees end of road for final salary pensions:
I am not surprised with the findings of this study. First, I have already discussed how private plans are reducing risk while public plans are increasing risk. I expect the gap between private and public pension plans will reach a boiling point in the next five to ten years. There will be a major backlash over guaranteed public sector pension plans which are backstopped by taxpayers. And politicians all around he world are taking notice. I was skimming through articles on Jack Dean's wonderful site, Pension Tsunami, and ran across an article by Monique Garcia of the Chicago Tribune, Pick your pension poison:
What's going on in Illinois isn't unique. We are already seeing politicians from other states and countries picking their pension poison. They simply can't afford to delay tough political decisions. In this environment, if they don't pick their pension poison carefully, they risk killing their chances for reelection. More worrisome, taxpayers risk being on the hook as public pension deficits balloon out of control. This is something which should concern us all because it will directly impact our future prosperity. It will also place an enormous burden on an already overstretched private sector which is increasingly called upon to support public sector pensions while their own pensions have reached the end of the road. Something has got to give as this situation is untenable.
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| Gold Seeker Closing Report: Gold Ends Unchanged While Silver Falls Over 1.5% Posted: 17 May 2010 04:00 PM PDT Gold and silver rose over 1% in Asia before they fell to see modest losses in London and then climbed back higher in early New York trade, but both metals then fell back off to new session lows in late morning action and gold ended unchanged on the day while silver closed with a loss of 1.51%.
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| An update on the Gold Bull Market and the SP 500 Index Posted: 17 May 2010 03:09 PM PDT By David Banister, The Technical Traders Back in the third week of April I predicted here on Kitco.com a topping in the broader market indices. The theory was the VIX levels were extremely and historically too low concomitant with extremely high historical readings in investor bullish sentiment gauges. After thirteen Fibonacci months of a bull cycle rally, it was likely an A B C correction to the downside would begin. In further follows ups on TheMarketTrendForecast.com service I run on April 20th, I again outlined concerns with falling volumes on small cap stocks and too many "stories" being run up too far ahead of the economics. At this point in the Bull market, it is common to have the crowd of investors move from a bias towards viewing all news as positive, to a negative slant on all news. Nothing has changed dramatically on the problems the world had before with Debt and currencies, but the reaction to those events turns negative. This works off the overly optimistic Elliott Wave patterns of the crowd, turning into a typical Zig Zag correction that lasts several months. There will be trading opportunities between that Mid-April topping forecast and my forecast for a bottom around mid-September. However, as recommended in April, Index investors and mutual fund investors should have been moving to the sidelines. I am looking for the SP 500 Index to drop to the 920-970 areas by mid-September before the next leg of the Bull market takes off. Now, the one caveat to that forecast is actually a lot more bullish. If the SP 500 can hold the 1100-1110 areas and pivot up strongly, we could move on to new highs. I put the likelihood of that around 20%, so be on guard. A counter-trend rally up in the next few weeks is highly probable, but the evidence continues to suggest working our way down into the 900's in the SP 500 before the Bull resumes in earnest. We are selectively buying Gold and Biotech stocks in the Active Trading Partners service as well. Gold has continued higher confirming my April 20th forecast on www.TheMarketTrendForecast.com a move from 1125 to 1235 in Gold. The Elliott Wave patterns remain extremely bullish for Gold to continue a 13 Fibonacci year cycle up into 2014. Gold has formed a very bullish pattern intermediately for a move to $1470-$1550 at the next major pivot top. In the interim, I expect continued consolidation in and around my $1,235 US levels before the next pivot high at $1300-$1,325 US. Fiat currencies are burning matches as foreign governments and other entities continue to attempt to put out a fire by printing more paper and covering the same fire with it. Until the analysts on CNBC stop questioning the validity of Gold and start questioning the validity of Fiat Paper, the bull will rage onwards with most of the pundits watching the caboose from the back of the tracks. SP 500 Forecast from the Mid-May TMTF forecast service updates:
Gold Forecast is for $1570 over 6-9 months with pivot at $1300
Checkout my forecasting and trading services at www.TheTechnicalTraders.com Chris Vermeulen
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| How Can ANYONE Claim A Top In Gold Posted: 17 May 2010 02:37 PM PDT when the masses are just hitting their stride in selling the gold and silver they own? Sears and Kmart are now marketing a service that allows customers to sell their gold and silver jewelry to help pay for purchases: Sears, Kmart and Pro Gold To Help Separate People From Their Gold. Remember, the classic signal that a bull market has reached its bubble-ified zenith is when the masses can't get enough and chase prices into the stratosphere. Think: Dutch tulip bulbs, internet/tech stocks, Florida swam real estate...The gold market is not only NOT exhibiting ANY of the classic topping signs, the above program being rolled out by Sears/Kmart, the ultimate middle class heaven, is indicative more of a bull market still in its early stages. In fact, while watching the Rockies/Cubs game tonight, cash for gold ads ran several times. Classic early bull market characteristic: the smart money accumulates what the masses happily sell, waiting for several years and several multiples higher to re-sell it back to the same dopes who sold it years earlier at much lower prices. If anything can be said right now, it's that the bull market in mindless American consumption is still intact, albeit running on fumes. Just as telling is the fact that big, supposedly smart big hedge fund money has barely scratched the surface in the sector. There's no telling how high gold, silver and mining stocks will be by the time the hoi polloi want in. 
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| Copper to Gold Ratio: RUN AWAY! Posted: 17 May 2010 01:57 PM PDT
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| Posted: 17 May 2010 01:45 PM PDT A point we've made numerous times over the years is that gold is not primarily a play on a decline in the US dollar's foreign exchange value; it is a play on a general decline in monetary confidence.
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| A Warning Shot Across Our Collective Bow Posted: 17 May 2010 01:16 PM PDT By Captain Hook, Treasure Chests That's the way you should view yesterday's historic crash, witnessing the largest single day point swings in history. You should view it as a warning shot across your bow, because most market participants will stay in the stock market until it's too late. Then, when the real panic starts, a lasting panic with no recovery like yesterday, they will freeze like deer in the headlights, and it will be all over but the crying as stocks crash like never before in a Grand Super-Cycle event. Yesterday was a signal it's coming, as it only marked the first wave of a larger sequence, with the really scary part being it was only seven days in duration. This of course means that after a bounce that could last several days (or not) with a good Employment Report, next week should see more selling, especially if open interest put / call ratio trends (lower) remain favorable in this regard. Here are a few things associated with the above you should realize, and take action on now just in case this thing spirals out of control. First, you should believe it's coming, as again, yesterday was the signal. It was not a one-day wonder, only being the selling climax of the first wave lower. As you know we have been appropriately bearish on stocks since sentiment turned, however usually the first wave is tamer than what we saw yesterday, possibly foreshadowing something even nastier as the larger degree move matures. In this respect, the last Grand Super-Cycle event saw 90% plus losses in equities, and there is no reason this will not be the case this time as well. Everybody is now in the pool, and must come out. The problem is there is only one small ladder (precious metals and other select tangibles), where most people will drown financially (losing the majority of their wealth via bureaucratic confiscation and blunder), the lesson being – be early. This brings us to our next point, which is banks and brokerages across the gambit, and internationally, will close, so it's imperative you exit the fiat currency system with a good portion of your savings if you wish to preserve them. Whether it be by closure or inflation, the bureaucracy will screw things up, rest assured of that, so again, exiting the system via diversification into physical and allocated precious metals accounts is imperative at this time given the speed at which events could unfold. Many will come to this realization soon and make this move, so don't hesitate, as like those in the pool, only the early one will make it. And I am talking to those of you playing the short side of the market as well. Don't be greedy, as sooner or later, if not the institution you are dealing with, the very viability of exchanges could and likely will come into question, possibly freezing your investments for a very long time, if not worse. This, along with the likely advent of a deflation scare / system failure / economic collapse now underway, is why governments will print money to infinity starting anytime now as budget deficits go parabolic. And all this added together is why gold can go to $3,000 in fairly short order, as again, increasing numbers escape our faulty and fraudulent markets, and more so, simply escape a fundamentally corrupt fiat currency economy being managed by the morally incomprehensible. And because this is a global phenomenon, this is why gold is becoming the world's reserve currency despite continued efforts to discredit it (and silver) by the bureaucracy. Buy all the dips folks. Captain Hook The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Friday, May 7th, 2010. Copyright © 2010 treasurechests.info Inc. All rights reserved. Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests. Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. We are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence. Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.
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| “Panicking German dealers” on a “Gold Rush Frenzy” Posted: 17 May 2010 01:09 PM PDT Over the past few days multiple sources are reporting that German banks are getting cleaned out of their gold bullion supplies. They are being forced to seek additional stock outside of Europe, in particular from South Africa and its popular krugerrand coins. From the Financial Times' coverage of "Germans lead gold rush frenzy"… "Panicking German dealers and banks have been desperate to get their hands on krugerrands, the world's most popular gold coin. "'We have some extraordinary sales to German customers,' says Deborah Thomson, the Rand treasurer. The refinery, which usually sells 2,000 coins to each customer at a time, says that last week it received an order from one German bank for 30,000 coins. Another bank requested 15,000 coins." These increased sales are taking place even as gold has exceeded the €1,000 price level for the first time in the history of the European currency… it's not exactly getting in on the ground floor. According to BND.com: "Some analysts are even anticipating that gold will hit $1,400 in the near future – a far cry from two years ago when $1,000 for an ounce was considered as realistic as finding the lost city of El Dorado. "'We're going to see some explosive movement in gold,' said John March, chief technical officer for gold trading firm Superior Gold Group in Santa Monica, Calif. 'We're looking at something that doesn't have a lot pushing it down but a lot pushing it up.' "Over the next eight years, March expects to see an average annual boost of 20 percent to 25 percent in the price of gold." How gold moves from its current perch is the subject of great debate. It's risen quickly and steadily and the most conservative option would be to wait for a pullback. At the same time, the global fiat currency presses are working at full steam. The long run case for gold still looks attractive. Regardless of what happens in the short run, gold is making for a fascinating parallel story to the fluctuating euro. It's one we'll watch closely. Best, Rocky Vega, "Panicking German dealers" on a "Gold Rush Frenzy" 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." More articles from The Daily Reckoning….
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| Posted: 17 May 2010 01:09 PM PDT By Jeff Nielson, Bullion Bulls Canada A good debate requires three components: a good format, proper moderation, and a topic which is amenable to this type of exercise. As someone who fancies himself to be a good, amateur "debater", I was watching for those components when I listened to "The Great Debate" between Bill Murphy of GATA and Jeffrey Christian of the CPM Group, and hosted by veteran broadcaster Jim Puplava.
Regrettably, what I heard when I listened to this "debate" was a flawed format, poor moderation, and a topic which (though no fault of anyone) is simply not suited to this form of scrutiny. My apologies to readers for the need to conduct such a detailed review of this exercise. However, as I shall demonstrate clearly, the entire "optics" of the debate change radically, once such a methodical analysis is completed.
Bear with me as I analyze the somewhat tedious procedural fundamentals which must be properly understood. In return, I dangle this "carrot": when it comes time to focus on the substance of the debate, I promise readers revelations which are arguably of even greater significance than Christian's infamous "100:1" admission.
First, the general rules of debate must be understood. While those unfamiliar with the legal process may view a debate as being very similar to what takes place in a court of law when two lawyers present their "case", there are many, very significant differences. Most notably, a trial isn't bound by the artificial constraints of a time limit. Thus, (assuming the judge and lawyers perform their duties properly) in a trial there can be no obstructionism, or stalling – since ultimately every facet of the matter will be explored.
In addition to this, a court of law has an extremely long and detailed set of procedural rules (to prevent either side from gaining advantage through illegitimate tactics), and an extremely vigilant and proactive "referee" (i.e. a judge) to enforce this procedural code of conduct.
Conversely, in the rigid constraints of a short, radio debate, and the relatively informal "rules", it is very easy to pervert the entire exercise – which is why I cited the three necessary components of a good debate. Now let me review these fundamentals specifically.
To begin with, at the beginning of the broadcast Puplava laid out his "rules" for the debate. Most were self-evident, and not necessary to itemize – with one exception: Puplava insisted that neither side attack the "integrity" of the other person. It is here that Puplava clearly failed in his own role. Not only did Puplava fail to prevent Christian from attacking the integrity of both Bill Murphy and GATA (repeatedly), but Puplava failed to add a further detail to his rules. More articles from Bullion Bulls Canada….
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| Posted: 17 May 2010 01:08 PM PDT
Paulson & Co's March 31 13F has been released. The fund is increasingly playing the barbell strategy, adding materially to both financial and gold stakes (both new and existing) across the board. While there were no new additions in the list of top 10 names, Paulson did add to some key names: the fund upped its stake in Bank of America by 16.8 million shares, bringing total value in BofA to $3 billion at 3/31 (combined with selling 3 million BAC Warrants); Paulson also has continued to increase its stakes in various gold producers, including Anglogold and Kinross. Other names added to included XTO, Hartford Financial, CBRE, First Horizon, and Macerich. The firm established new positions in MGM (40 million share), Apache (3.4 million), Mylan (11.4 million), Family Dollar (6 million), Devon Energy (3.3 million), Novell (25 million), Novagold (20 million), Supermedia (2.6 million), Dex One (3.7 million), Smith International (2 million), Boyd Gaming (4 million), Randgold (0.5 million), Iamgold (2.7 million), Beazer (5 million), Barrick Gold (0.4 million), and First Midwest (0.4 million). In short, Paulson added 4 new gold exposures in addition to its massive $3.4 billion stake in GLD, Anglogold ($1.7 billion), Kinross ($567 million), and Gold Fields ($297 million). Stakes eliminated completely consist primarily of various M&A arb deals that closed: Burlington Northern, Dr Pepper, Chattem, IMS Health, Encore Acquisition, Fifth Third, Kraft, Liberty Media, New York Community Trust, Pepsi Bottling and Pepsi Americas, Philip Morris, Sun Micro and Valley National. Of Paulson's $21 billion in total notional holdings at March 31, 30% were held in names directly related to gold extraction, production or gold ETFs. Below is a full list of the fund's holdings as of March 31. Paulson's holdings as of Dec. 31 can be seen here.
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