Gold World News Flash |
- International Forecaster May 2010 (#7) - Gold, Silver, Economy + More
- Matt Badiali: Smart Money Holds Gold & Buys Major Miners
- Oaktree's Howard Marks Waves a Warning Flag
- Bear Market Race Week 136: Gold, Silver & the DJIA’s 52 Week Global Performance
- The Case for a Fed Rate Hike
- U.S. Mint Sales Are Over the Moon
- The Single Most Important Financial Step You Can Take Right Now
- Stormy Seas on the Atlantic
- Inflation-Proof Deflation Hedge
- Is Gold Money?
- Guest Post: Some Elliott Waves
- James Turk: Silver is Inching Closer to an Upside Breakout
- James Turk: Silver inching closer to an upside breakout
- LBMA gold shorts backed by central banks, Rickards tells King World News
- This past week in gold
- 1794 silver dollar sells for record $7.85 million
- International Forecaster May 2010 (#7) – Gold, Silver, Economy + More
- The Great Debate, Part III: ‘Loose-lips’ Does it Again
- Seth Klarman "More Worried About The World Than Ever" Redux
- Silver Prices Plunge in 3rd Week of May
- U.S. Mint Bullion Eagle Coins Surge, Despite Plunging Gold and Silver Prices
- Silver market analyst Butler comments to KWN on last week’s smashdown
- Gene Arensberg’s ‘Got Gold Report’ flash
- A billionaire goes all-in on gold
- ‘Sell Gold, Buy Oil: The Numbers Are Clear’ – Oh Really?
- Investing in Rhodium: World’s Most Expensive Metal
- Jim Rickards on King World News
- The Giant Banks, Federal Reserve and Treasury Have All Blackmailed America
- Cap and Trade: A Gigantic Scam
- Financial "Reform" Cheat Sheet
- It's Official - Cuomo Announces Run For Governor
- A View of the Chinese Economy from Atop the Great Wall
- NY Fed President: "The Recovery Is Crumbling"
- Jim Rickards Discusses Financial Warfare
- The Paradox of Market Chaos?
- Silver market analyst Butler comments to KWN on last week's smashdown
- Silver market analyst Butler comments to KWN on last week's smashdown
| International Forecaster May 2010 (#7) - Gold, Silver, Economy + More Posted: 23 May 2010 03:00 AM PDT Keeping up with today's dysfunctional markets is very difficult because they change hour by hour. The problems of Europe have stolen center stage from US problems. The focus is on Europe, but we all should remember trillions of dollars have been injected into the US financial system since mid-2007. All are attempting to maintain the façade that all is well, when in fact all is not well.
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| Matt Badiali: Smart Money Holds Gold & Buys Major Miners Posted: 22 May 2010 06:08 PM PDT
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| Oaktree's Howard Marks Waves a Warning Flag Posted: 22 May 2010 05:56 PM PDT Market Folly submits: Chairman of Oaktree Capital Howard Marks is out with his latest commentary entitled, 'Warning Flags.' You'll remember that last time we checked in with Marks he was frustrated with the government and openly voiced it in his missive. This time around, he revisits some of the predictions he made in his previous commentary where he wrote,
Complete Story »
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| Bear Market Race Week 136: Gold, Silver & the DJIA’s 52 Week Global Performance Posted: 22 May 2010 05:38 PM PDT The 1929 & 2007 Bear Market Race to The Bottom Week 136 of 149 Gold, Silver & the DJIA's 52 Week Global Performance Gold, Silver & the DJIA's Forex A-D Lines Deflating Ross Hansen's "Inflate This" Mark J. Lundeen [EMAIL="mlundeen2@Comcast.net"]mlundeen2@Comcast.net[/EMAIL] 21 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. The Chart above is a Weekly Closing Price Chart. Had Friday not brought the DJIA up 125 Points, we'd find ourselves very close to the lows of Wk 121, last February. Here is a Daily Bar Chart, a better view of the DJIA. If we're seeing a correction, and that may be the case, this is a very nasty correction. But seeing the gains of 3 months wiped out in only 19 trading sessions, reeks of Stinky old Mr Bear doing what he does best: picking the pockets of people who don't know when to leave the Stock Market. I don't sense much fear when I'm looking at CNBC,...
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| Posted: 22 May 2010 05:38 PM PDT The Case for a Fed Rate Hike Employment Is Turning the Corner The Headwinds of Money Supply Who Stole the Inflation? The Fed Is On Hold An Inverted Yield Curve? LA, Vancouver, San Francisco, and a First Often Wrong, Seldom in Doubt Everywhere there are arguments that we are in a "V"-shaped recovery. And there are signs that in fact that is the case. Today we will look at some of those, and then take up the topic of when the Fed will raise rates. We open the case and look at the evidence. Is there enough to come to a real conviction? I think there is. (And at the end of the letter I mention two conferences I am speaking at in the next few months, in Vancouver and San Francisco.) Additionally, we are working on a MAJOR revision of the letter. There will be a lot more ways for you to interact with me and each other. A lot more information and capabilities. We are excited. It should be here by the fall. Tiffani and I think you are really going to ...
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| U.S. Mint Sales Are Over the Moon Posted: 22 May 2010 05:38 PM PDT Gold recovered from its little pounding in early Far East trading on Friday morning... and then rallied right into the Hong Kong close. But once the Far East was done trading for the weekend, the selling pressure resumed into gold's New York low of $1,169.60 spot, which occurred a few minutes after 9:30 a.m. Eastern time. From that low, gold rallied into the London p.m. fix at 10:00 a.m. New York time, before getting sold off... but then rallied to its high of the day [$1,188.90 spot] about 11:45 a.m. Eastern. Then it got sold off into the Comex close... and flat-lined for the rest of the trading day. All in all, it wasn't a very exciting trading day... but a new low was set for this move down... and, without doubt, there was more tech fund long liquidation. Silver traded in a twenty cent range for virtually the entire day on Friday... but the bullion banks did set a new low price for the move. That low came at the same time as gold's... minutes after 9:30 a.m....
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| The Single Most Important Financial Step You Can Take Right Now Posted: 22 May 2010 05:38 PM PDT By Porter Stansberry Saturday, May 22, 2010 You might recall as early as late 2008, I warned the U.S. had embarked on a massive inflation – the creation of money – designed to save our banking system. I believed this marked the beginning of the end for the U.S. dollar paper standard. And the imbalances in our economy had become so large they had warped the real economy: Americans no longer made anything or saved anything (no deposits and no true assets to back up the money). They'd come to believe they could grow wealthy merely by trading houses with one another, effectively manufacturing money. It was an enormous delusion, bringing about the largest accumulation of debt in human history, a debt bomb enabled by the first truly global paper currency – backed by nothing at all. Here is what I wrote then… We are past the liquidity crisis. The forced selling has come to an end. We are now beginning the solvency crisis… With a cur...
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| Posted: 22 May 2010 05:38 PM PDT [FONT=Arial,Helvetica,sans-serif][COLOR=#000000][FONT=Arial][COLOR=#000000] John Browne - Senior Market Strategist, Euro Pacific Capital. [/COLOR][/COLOR][/FONT] The European Union's debt crisis, the threatened collapse of its fledgling 'euro' currency, and the uncertainties created by the UK elections may seem very far removed from the American ship of state, but, in reality, this turbulence threatens to capsize our fragile economy. Greece is in the most immediate danger of default, followed closely thereafter by Portugal, Spain, and perhaps Italy. As the European Union overrides its own treaty agreements to offer bailouts to these 'PIGS,' global financial markets have panicked. Essentially what has happened is that the covenants and assumptions underlying one of the bedrock reserve currencies of international finance - and the presumed successor to the US dollar as primary reserve - have been broken. This requires a global re-rating of purchasing power risk. The ...
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| Inflation-Proof Deflation Hedge Posted: 22 May 2010 05:38 PM PDT by Adrian Ash BullionVault Friday, 21 May 2010 Knowing how governments will respond to deflation, the case for inflation-proof gold looks increasingly clear to cautious wealth... USELESS for pretty much everything except storing wealth (its economic value is social, not industrial), gold acts as inflation-proof money when investors need it most – right in the middle of an asset-price deflation. At least, that's how people choosing to buy gold amid today's global deflation in risk assets see it. Why else do you think German coin and small-bar dealers are being emptied, even at 5% (and worse) premiums to "melt" value? Why else did gold-hoarding deliver secure, rising purchasing power amid the Great Depression of the 1930s...? Given central banks' default response to any level of financial stress, it's a unique and appealing attribute. Because rather than leaving cash hoarders alone, sub-zero real rates of interest – plus the ever-present threat o...
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| Posted: 22 May 2010 05:30 PM PDT
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| Guest Post: Some Elliott Waves Posted: 22 May 2010 02:35 PM PDT
MortiES’ Weekend Analysis 22May2010 ~ Bulls Bank Profits, Submitted by Value of Perfect Information A Wave 4 is described as a Profit-Taking Wave. It is not so much that the Bears are getting stronger as the Bulls are taking profits off the table as they see them eroding. The mini-crash on 6May may not have been real in the eyes of many, but it did technical damage to the market. The emotions of traders are seen in the market as fear and greed have their way. That is also why I said in my post on 6May that the low of that day would be taken out, even though the massive rebound made many think it was just an anomaly. That low (1056) was broken Friday as ES dipped to 1051.25. I think we still have more to go, but I’ll take that new low for now. If that first leg down on 6May didn’t convince traders and investors that there was a significant correction beginning, then the more deliberate decline to the new low on Friday should have convinced them that there is trouble brewing with their new-Bull market. IMO, this is why technical analysis is so great. It is based on repeatable mass psychology, and it is driven by the emotions, fear and greed. Fear and greed are ever-present human emotions that form repeatable patterns in the market, whereas news and world events cannot be anticipated and measured by the lowly traders like myself. The first chart below is an aggressively projected path for ES. As markets unfold, they reveal more information and counts can change, but for now this is how I am reading this 90 Minute Globex Chart. I am counting it as an ABC correction, making up W4 of the impulsive rally beginning 6Mar2009. I’m sure EWI – the Elliott gods in Atlanta – have this as the beginning of an impulsive move down after the completion of what they would call P2. They might turn out to be right, but that is not the flavor of Kool Aide I like at this time. I find that I have done well in analysis by not throwing the towel in too quickly by calling an end of a trend prematurely. Because this move up from 6Mar can contain a correction like the one I am proposing, I will go with it until proven otherwise by market action. Either way, I am Bearish until we end this wave and reverse into a W5.
For the new subscribers who may not have seen my Weekly chart that has the most Bullish scenario for ES, it is presented here with the newest data.
And then the most important question for short-term traders, what is it going to do Monday? Well, even during Bearish times, there are situations when we have to project rallies. Monday is one such time. I have no idea how ES will get to my target on Monday. I could take all day to form a green candle that makes it to the end of W4 or it could gap up during Globex and head down. We will just have to wait and see. W3 is at its typical, yet minimal, target level. It could also extend and continue on down to another Fib level, but my impression is that we will see a rally to at least the 1100&rime;ish level.
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| James Turk: Silver is Inching Closer to an Upside Breakout Posted: 22 May 2010 01:33 PM PDT
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| James Turk: Silver inching closer to an upside breakout Posted: 22 May 2010 01:23 PM PDT 9:20p ET Saturday, May 22, 2010 Dear Friend of GATA and Gold (and Silver): GoldMoney founder James Turk, editor of the Free Gold Money Report and consultant to GATA, writes tonight that silver's "huge accumulation pattern" of the last three years is almost finished and as a result "silver is inching closing to an upside breakout." That's the headline on Turk's commentary and you can find it at the FGMR Internet site here; http://www.fgmr.com/silver-is-inching-closer-to-an-upside-breakout.html CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Join GATA here: World Resource Investment Conference * * * 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 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/
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| LBMA gold shorts backed by central banks, Rickards tells King World News Posted: 22 May 2010 01:08 PM PDT 9p ET Saturday, May 22, 2010 Dear Friend of GATA and Gold: Eric King today has a spectacular 15-minute interview with James G. Rickards, senior managing director for Virginia-based research firm Omnis Inc., that has been written up wonderfully at Zero Hedge here: http://www.zerohedge.com/article/jim-rickards-discusses-financial-warfar... Perhaps most interestingly, Rickards speculates that London Bullion Market Association members that are short gold are underwritten by central banks. That would confirm GATA's contention that the LBMA is a major mechanism of the gold price suppression scheme. Send that man his tin-foil hat! You can find the Rickards interview at King World News here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/22_J... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Join GATA here: World Resource Investment Conference * * * 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 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/
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| Posted: 22 May 2010 11:00 AM PDT By Jack Chan at www.simplyprofits.org 05/22/2010
GLD – sell signal this week. SLV – neutral. GDX – sell signal this week. XGD.TO – sell signal this week. Summary Long term – on major buy signal. Short term – on sell signals. We continue to hold our core positions, waiting for new buy signals and set ups to add to positions.
Disclosure We do not offer predictions or forecasts for the markets. What you see here is our simple trading model which provides us the signals and set ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector.
End of update
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| 1794 silver dollar sells for record $7.85 million Posted: 22 May 2010 08:47 AM PDT Is it only in America that a dollar can get you almost 8 million? Probable not if you are a coin collector or seller and have The Oldest Silver Dollar-1794 Liberty Dollar. What just might be America's oldest silver dollar has become the world's most expensive coin, with its owner saying it changed hands in a private transaction between coin collectors for around $8 million. Steven L. Contursi owned the mint condition 1794 Liberty Dollar for the past seven years. but when he was made an offer he could not refuse. He is going to sell the coin to the Cardinal Collection Educational Foundation of Sunnyvale, for $7.85 million. According to the American Numismatic Association, "that is the highest coin sale recorded. The previous record price paid for a coin was $7.59 million for a U.S. minted 1933 $20 gold piece. The U.S. began producing silver dollars in 1794, and this particular one remains in near perfect condition 216 years later. Contursi's coin is in near perfect condition. Not bad for a coin that is 216 years old. This particular coin began being minted in 1794. Professional coin grader, David Hal stated that, "Even if it looks like it's been run over by a truck it would still be worth a hundred grand." The 1794 Liberty Dollar was among the first American silver dollars ever made. Get this Baby Boomers, according to Larry Shepherd, executive director of the American Numismatic Association, there were around 1,750 of this kind of silver dollars produced that year and only around 150 are known to be in still in existence. This particular coin is believed to be from a hand cranked press from a special piece of polished, high quality silver. That means that it was intended for either a dignitary or the mint's own private collection. When Steven L. Contursi was asked why he sold The Oldest Silver Dollar-1794 Liberty Dollar, he just laughed and stated, "He just finally made me an offer I couldn't refuse." For the full story of "What Is The Oldest Silver Dollar-1794 Liberty Dollar," go to Houston ABCNews. Attachment 1889 http://babyboomeradvisorclub.com/201...iberty-dollar/
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| International Forecaster May 2010 (#7) – Gold, Silver, Economy + More Posted: 22 May 2010 06:36 AM PDT By Bob Chapman, The International Forecaster US MARKETS Keeping up with today's dysfunctional markets is very difficult because they change hour by hour. The problems of Europe have stolen center stage from US problems. The focus is on Europe, but we all should remember trillions of dollars have been injected into the US financial system since mid-2007. All are attempting to maintain the façade that all is well, when in fact all is not well. Underlying assets are worth far less than their stated value. As a symptom of this corporate bank lending has fallen off a cliff and in Europe it doesn't exist. Without such lending there can be no recovery. The American implosion will now be repeated in Europe. The green shoots of recovery have now turned into poison ivy. The abyss has again been filled with more debt and more fiat currency. In the process the Fed and now the ECB have lost all credibility. The $1 trillion initial package to save the euro thus far has been a failure as the euro continues its decent. This bailout plan has US fingerprints all over it. The elitists figured they could take down the entire system in 1-1/2 to 2 years, but the poster child Greece didn't cooperate, so all their plans have been split asunder. As far as the bailout is concerned will the effort be stopped in German courts and will the austerity programs in the weak countries work? Greek citizens say no. We will just have to see if they are serious. Do not forget that the bogus books in Greece are nothing different than almost all nations have been engaged in. Greece is no better or worse than the rest. Again, like the US, Europe is only trying to buy time. In fact, Mr. Trichet and Mrs. Merkel tell us officially that is what they are up too, buying time. This is not a situation where Greece acted alone; every nation has been doing something very similar. What is different this time is that the Greeks have responded with rage over the past month. As a result of that, the falling euro and skepticism as to whether the stimulus will work has pushed acceptance in the wrong direction. Needless to say, all these machinations have led to deep disappointment in the wealthier EU member countries. At this point we don't see cooperation between Greeks and their government and the bureaucrats led by a Bilderberger. On the other side the other members of the EU and the IMF refuse to conduct a bailout, which is supposed to protect the members. The Greek government may have signed the treaty, but the Greek populace hasn't. Stringent austerity measures are not something they'll stand still for encompassing the next ten years. The question also arises is $1 trillion going to be enough? Germany and France alone own $635 billion in PIIGS bonds. World banks, particularly European banks, made some very bad decisions in buying bonds from the PIIGS nations, and that is what this finally boils down too. – the loans and bonds, the money for which was created from out of thin air. What this amounts to is another giant bailout by world taxpayers for banks, particularly European banks in this case. You might have also noticed that the ZEW German Investor Confidence Index fell from 53 in April to 45.8, reflecting further German reaction to the $1 trillion aid package. Many believe the eurozone will collapse and many want it to, especially in Germany. As a reflection of that the ZEW Index fell from 53 in April to 45.8 in May. The Index aims to predict developments six months ahead. German confidence is waning. Prior to the allocation of $1 trillion to aid Europe's basket cases, eurozone central banks bought the junk club med bonds. All the funds coming from taxpayers. If that had not occurred BNP Paribas, Unicredit, BBVA, Societe General and Santander would have collapsed. That is what this package is all about, bailing out the oligarchic banks. Of course, Mr. Trichet, head of the ECB, tells us we have not changed monetary policy, which flies in the face of reality. He also tells us all the money will be returned to the people, the lenders. Of course that isn't true. Even if it was returned we have no way of verifying it, because everything is a big secret. What Mr. Trichet is not telling you is that secretly the Fed has been feeding liquidity into the ECB for 2-1/12 years, otherwise it would have been insolvent long ago. The euro has been a failure, as we predicted it would be 12 years ago. As the Fed feeds the ECB liquidity via swaps and other more subtle methods, the ECB feeds the banks fund to keep them from collapsing. In turn, the banks buy eurozone government bonds in another form of quantitative easing. Such phony antics don't fool real professionals, who know from history what the results will be. This 3-card Monte game is not fooling the average European, who for the last month has been wiping out gold and silver coin dealers in Germany and Switzerland. The euro is history. It is just a question of when. The fight for supremacy is now being waged between the dollar and gold, a battle the dollar cannot hope to win. What you are seeing is a flight to quality, something we have described for more than 50 years. Presently, as far as the euro is concerned, it's garbage in garbage out. The ECB and other central banks are buying junk bonds, toxic waste, how can it be expected the quality of their reserves are anything but junk? This is not only a euro-ECB problem, but it is also a Fed-dollar problem. How can any Europeans and Americans not want gold? Just like the dollar, and all currencies have been devaluing versus gold, so has and will the euro. The next steps for the eurozone and the US will be much higher inflation and perhaps even hyperinflation. This means Germany, the trading powerhouse, will become less competitive. They'll lose business and their profits will fall. Part of the liquidity game is not only to save the financial sector, but also to keep European stock markets from falling, much the same as the Treasury and Fed have done in the US via the Executive Order for "The Working Group on Financial Markets." The result has been higher inflation, higher stock markets in Europe, and a loss in value of everything denominated in euros and, of course, a gain by gold against the euro and all other currencies. The public doesn't see this nor do they understand. That is why we explain what is going on in simple terms in this publication. In Europe, as in the US, there is an all out war to keep stock markets from falling; least the public discovers they have been the victims of a Ponzi scheme. As you can see all things are not as they seem to be. As a result of this monetary and fiscal profligacy we have a global financial breakdown in the works that no one will escape. Worse yet, no one has offered any solutions other than to throw money at the problem. Funds have been tunneled to the very parties that caused the problems in the first place. As a natural result gold has continued to rise in price as both the US and Europe have come to the realization that their political powers are controlled from behind the scenes by personages of great power and wealth and that part of the way to change that is to throw almost all incumbents out of office. This way at least for a time the control of these elitists can be neutralized and their power base rendered ineffective. That accomplished, legislation can be passed to reverse so many of the outrageous laws we have. The first issue would be to end corporate ability to keep two sets of books and mark assets to market, not to model. Such normal moves would rid us of too big to fail corporations; something our Senate has been incapable of doing. On Thursday the Senate is thought to be ready to pass a financial reform package and not a word has been spoken about cooking the books – like the situation didn't even exist. Such legislation would bring all manner of lawsuits and criminal charges as well. It is absolutely incredible that no AG or law enforcement official has for as far as we can remember, brought criminal charges against these lawbreakers. Just as an example, trillions have been lost in real estate and no corporation or individual has been prosecuted for criminal fraud. Doesn't that seem strange to you? It has been seven years since we declared Fannie Mae and Freddie Mac insolvent. They were and were taken over by the taxpayer and yet not even civil charges for looting the two GSEs. Is it any wonder few are left who trust government? The Illuminists who control central banks have in the process of taking down the financial system irretrievably exposed themselves before the world. Talk shows and the Internet worldwide are exposing everything they are doing, thus, when the system finally collapses most people will know who is responsible. The world banking system is insolvent. Banks retain two sets of books, mark-to-model and hold vast inventories of residential and commercial real estate that they hold off the market. There lending has been curtailed by 20% and only then to AAA corporations. The Fed has just taken on $1.7 trillion in toxic CDOs, and it will only take a small adjustment to the value of assets for the Fed to show a negative balance sheet. We wonder as well, what the FASB, the Financial Accounting Standards Board, and the BIS, the Bank for International Settlements in Basel, were thinking when they allowed mark-to-model, as apposed to mark–to-market, and keeping two sets of books? All those earnings and the financial conditions of hundreds of thousands of companies are completely phony. All this is augmented by quantitative easing, or by throwing money at the problem, which has solved nothing. If a new stimulus program is not implement and the Fed does not add liquidity the system will collapse. QE has not ended. That liquidity is still in the system, although some has been sterilized. That is why, irrespective of official phony CPI figures, America is going to have considerably higher inflation. Make no mistake the Fed has created another bubble via the printing press, which ends up in monetization and inflation. This is why gold is a lock to go higher. Bank failures are up to 72. It looks like by the end of 2010 we will see more than 200 banks fail and perhaps 300. Some, 2,000 are under the control of the Comptroller of the Currency. Seven million homeowners will lose their homes this year. The second half of the year will be disastrous and we won't see the end of this until mid-2012, if we are lucky. Financial ledgermain is the order of the day. Disclosure has lost its meaning. That is what happens when you hold assets of declining value off your balance sheets. Rules and laws are repeatedly broken and no one seems to care. Corporate desires are laws unto themselves, but what else would one expect in a corporate fascist society? Wake up America before it is too late. Kick out all sitting House and Senate members in November, with a few exceptions. If you do not you cannot affect change. If you do not you will end up fighting in the streets. The commercial paper market fell $27 billion to $1.076 trillion this past week. The Obamacare is going to cost Americans about $500 billion a year. Benefits do not start until 2014. The law implements 19 new taxes. This health law was explained by Nancy Pelosi as, "We have to pass the bill, so that you can find out what is in it." Well, you got it and now you have to pay for it. The bill also sweeps away a host of state regulations and permanently alters state insurance markets. From now on the Federal government will manage the health care of all Americans. It will be just like England and Canada where people wait in line for operations, because the doctors have fled the country, and people often die while waiting. Then there will be those with chronic diseases who will die from lack of care or who will be asked if they would like to die to save the country money, that can be spent on more wars. Washington decides who lives and who dies. Who will receive what medicines and what will be covered. What treatments are allowed and which are not. Of course, the President, Vice President, Cabinet, Congress and leadership are exempt. The elderly will lose their Medicare Advantage Coverage. Those with health Savings Accounts will need to buy new policies or face penalties. In the coming years individuals will pay a yearly penalty of $695.00, or up to 2.5% of their annual income, if they cannot show they purchased a government-approved health policy. That bloc consists of more than 30 million people. You can now better understand why insurance companies wanted nationalized health insurance. Families will pay a yearly penalty of $347 per child, up to $2,350 per family, if parents cannot show they have purchased a government-approved plan. Business owners with more than 50 employees must have government-acceptable health coverage or pay a yearly penalty of $2,000 per employer if at least one employer receives a tax credit. Obamacare imposes a 3.8% tax on investment income of individuals making $200,000 or more and on families making $250,000 or more. The tax is adjusted to inflation, so more people will fall under it each year. Seniors on fixed incomes and people with IRAs and 401(k) plans will be hit particularly hard. Those of you who are healthy had better work as long as you possibly can. If you do not you may be out of funds before you are 72 and spend ten years living in abject poverty. Starting in 2018, there will be a 40% annual tax on health care plans valued at $10,200 for individuals and $27,500 for families. Single people earning $200,000 or more and couples making $250,000 or more will pay an additional 10.9% in Medicare taxes. The bill imposes a 3.8% tax on home sales and other real estate transactions, so on a $200,000 home sale the tax would be $7,600, plus sales commissions. There will be a 2.9% tax on medical devices, and a 10% tax on tanning salons. The IRS will enforce these laws with 16,500 new employees to audit and investigate you. A new Gestapo. If you come up short the IRS can confiscate tax refunds, place liens on property and seek jail time if health-related penalties and taxes are not paid. It is called corporatist fascism. Nine million people will lose their employer-provided coverage – 13 states have filed a lawsuit challenging the government's powers to force state residents to buy insurance from private companies. You wanted change, you got it. This is the nightmare of all nightmares, especially for the elderly. It should interest you to know that my Intel source inside the Fed says absolutely no later than November the banking system should implode. Presently 75% of banks have problems and that the top 5 banks will take over all the others in a general nationalization. There is tremendous fear and uneasiness in the banking world. – This was a section from the most recent issue of the International Forecaster. You can read the full 35 page issue by using the information below to subscribe. THE INTERNATIONAL FORECASTER P. O. Box 510518, Punta Gorda, FL 33951-0518 Published and Edited by: Bob Chapman CHECK OUT OUR WEBSITE 1-YEAR $159.95 U.S. Funds US AND CANADIAN SUBSCRIBERS: Make check payable to Robert Chapman (NOTInternational Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address. Or: We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$159.95 for a one-year subscription. You can email us in two separate emails (1- the Credit Card Number with full name, address and your telephone number and (2- the Expiration date on the card.
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| The Great Debate, Part III: ‘Loose-lips’ Does it Again Posted: 22 May 2010 06:26 AM PDT By Jeff Nielson, Bullion Bulls Canada In Part I, we heard Jeffrey Christian declare "in all of my years of involvement in the gold market, I have never seen any evidence of any efforts to manipulate or suppress the price of gold". Along with that, I pointed out that Christian did his best to undermine GATA's Bill Murphy – through a steady stream of insulting rhetoric and condescending lectures (contravening the "rules" of the debate).
In Part II, we listened to Christian talk about all the 'good' manipulation of the gold market which he had personally observed – which he vehemently attempted to distinguish from the 'bad' manipulation which he claimed was alleged by GATA. I also added some information which Christian left out: the reasons why the U.S. government and its bankers were engaging in their 'good' manipulation: to help the U.S. government cheat on its finances, and allow it to fund the immoral Vietnam War.
If Christian had stopped at this point, he could have still emerged from the debate with some semblance of his credibility remaining. His categorical denial that any gold manipulation had ever taken place could have been construed by apologists as a 'slip of the tongue': that what Christian meant was only that he had never encountered any 'bad' manipulation.
However, one thing Christian demonstrated consistently throughout the debate was his own arrogance. He divided his time in the debate almost equally in boasting about his own prowess and integrity and denigrating Bill Murphy and GATA. As with most extremely arrogant individuals, Christian is prone to overconfidence – and thus he simply 'over-played his hand'.
When conversation turned to the issue of the UK dumping more than half of its gold onto the market at the all-time low price for gold (in real dollars), Christian should have just walked away from the subject. He could have simply said that Gordon Brown had made a blunder, and that he didn't know what Brown was thinking at the time, or simply offered no explanation at all.
But "Loose-lips" couldn't restrain himself. He launched into his own myth about the great, UK gold-dump: he insisted that the UK government had not been trying to crash the price of gold by dumping this huge quantity of gold onto the market in open auctions, but rather had been trying to "protect" the gold market. In insisting upon pursuing this utterly absurd fabrication, Christian managed to contradict himself several more times. More articles from Bullion Bulls Canada….
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| Seth Klarman "More Worried About The World Than Ever" Redux Posted: 22 May 2010 06:26 AM PDT
A few days ago we pointed out that Seth Klarman is bracing for yet another lost decade, as the legendary Baupost investor anticipates nothing good out of government incursion in capital markets, and has come up with the best description for the fake and busted and heart attack inducing market yet, comparing it to a "hostess twinkie" (full must read article summarizing his speech at the CFA Institute here). Another must read piece, for those who may have missed it the first time around, is his summary of lessons learned and unlearned from the financial crisis, found here. Today, the WSJ's Jason Zweig has a follow up on Klarman, who, as we noted earlier "is more worried than ever" and concludes that "all we got out of this crisis was a Really Bad Couple of Weeks mentality. I am more worried about the world, more broadly, than I ever have been in my career." And they say Zero Hedge is bearish... From the WSJ:
What is the proper trade according to Klarman?
And cheap they will get: there is only so much artifical propping the government can do. What we are far more curious about is the ABX-like trade that Hugh Hendry pointed out he had set up with "15% downside and 75% upside." Since this was disclosed in February, Hendry has kept mum, and has still to provide more information on just what this trade is. And speaking of ABX, and risk-free money, we wonder if readers have had any success with the ABX-Prime market so far?
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| Silver Prices Plunge in 3rd Week of May Posted: 22 May 2010 06:25 AM PDT Silver prices were brutalized during the third week of May, tumbling with other precious metals with stiff selling the order of the day for much of the week.
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| U.S. Mint Bullion Eagle Coins Surge, Despite Plunging Gold and Silver Prices Posted: 22 May 2010 06:25 AM PDT
New York gold prices finished lower for the fourth consecutive session on Friday, with June futures tumbling to $1,176.10 an ounce, plummeting 4.2 percent this week. U.S. Mint one-ounce American Gold Eagles, however, soared. The coins advanced 67,000 this week, as compared to a 31,000 increase during the second week of May and a 41,500 gain during the first week. May sales on Friday reached 139,500, bringing the Gold Eagles to 471,000 for the year. (…) © Mike Unser for Coin News, 2010. |
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| Silver market analyst Butler comments to KWN on last week’s smashdown Posted: 22 May 2010 06:15 AM PDT 10:30a ET Saturday, May 22, 2010 Dear Friend of GATA and Gold (and Silver): Silver market analyst Ted Butler today tells King World News' Eric King that while last week's smashing of the silver market by large commercial traders could not have been more obviously manipulative, he doesn't think J.P. Morgan Chase was behind it this time. He thinks the outlook for silver is now 80 percent bullish and 50-60 percent bullish for gold. Butler is losing patience with the U.S. Commodity Futures Trading Commission's failure to act against manipulation in the metals market but says he's still hopeful. The interview is 10 minutes long and you can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/… CHRIS POWELL, Secretary/Treasurer * * * 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:
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| Gene Arensberg’s ‘Got Gold Report’ flash Posted: 22 May 2010 06:15 AM PDT 11:40p ET Friday, May 21, 2010 Dear Friend of GATA and Gold (and Silver): Gene Arensberg's "Got Gold Report" tonight expresses some puzzlement that heavy shorting by large commercial traders didn't show up more in the gold traders report just before this week's smashdown in the precious metals. Arensberg writes: "For gold we cannot point to the commercials being aggressive in their hedging and short selling just ahead of this week's knock-down in the markets. Indeed, they actually reduced their collective net short positioning a little just ahead of the harsh move lower. But in silver we certainly can point to just that. The commercials piled on the short side in a big way just as the sell-down was getting under way." Arensberg's report is headlined "COT Flash May 21″ and you can find it here: http://treo.typepad.com/20100521COTflashPDF.pdf CHRIS POWELL, Secretary/Treasurer * * * 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:
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| A billionaire goes all-in on gold Posted: 22 May 2010 06:15 AM PDT By Liam Pleven and Carolyn Cui http://online.wsj.com/article/SB1000142405274870416770457525878370287577… Gold is setting records again, boosting the holdings of central banks, Armageddon worrywarts, and ordinary people who own gold bars, coins, and jewelry. But few individuals stand to benefit as much as low-profile billionaire Thomas Kaplan. A New York-born commodities magnate who earned a doctorate in British colonial history at Oxford, Mr. Kaplan oversees an empire devoted largely to gold. Many fund managers and high-rollers have allocated small percentages of their portfolios to gold as a hedge against inflation. But Mr. Kaplan is the bull of bullion. He has gone further than perhaps any other major investor, betting the majority of his wealth on gold and other precious metals. And it reflects his deeply held conviction that global economic instability could bring rising demand for gold. Through his firm, Tigris Financial Group, and affiliates, Mr. Kaplan has loaded up on bullion and bought up properties in 17 countries on five continents, where geologists are exploring for more. Tigris subsidiaries have taken stakes in mining companies, including tiny firms that have yet to produce an ounce. Though he won't disclose how much physical gold he owns, Mr. Kaplan, who is 47 years old, controls up to 30% of the shares in some so-called junior miners. Together, his holdings amount to a nearly $2 billion bet on gold, more than the Brazilian central bank's bullion is currently worth. "I've reached a point where I feel the only asset I have confidence in is gold," Mr. Kaplan said in an interview at Tigris's midtown Manhattan headquarters. Mr. Kaplan's views are shaped by a concern, shared by many investors, that heavy government spending hasn't contained the woes facing the financial system. Gold hit an exchange record of $1,242.70 a troy ounce at the Comex division of the New York Mercantile Exchange on May 12, days after euro-zone leaders announced a nearly $1 trillion bailout for ailing member states. He has experience with how supply and demand can drive the price of raw materials. His doctoral thesis studied Britain's involvement after World War II in Malaya, home to prized rubber and tin. That taught him how far people and governments will go to secure natural resources. Wanting to apply his insights, he went to Israel to advise hedge funds. His nose for finding valuable resources was developed at firms he started that explored for silver and natural gas, which helped him make his fortune. Gold miners are struggling to make major discoveries and it takes years to bring new finds into production. If people want to stock up on gold in a hurry, it will be hard to ramp up production enough to satisfy them, Mr. Kaplan believes. "You've got a perfect storm with no apparent solution," he said. "If the world does well, gold will be fine. If the world doesn't do well, gold will also do fine … but a lot of other things could collapse." Mr. Kaplan is known in the mining industry for his all-in approach. "When he likes something, he dives in with both feet," Egizio Bianchini, a banker at BMO Capital Markets in Toronto, said of Mr. Kaplan, whom he has worked with in the past. In his charitable endeavors, Mr. Kaplan works similarly. In 2006 he co-founded Panthera Corp., whose "single-minded pursuit" is preserving the world's endangered wild cats, he wrote in an open letter on the group's site in which he cited inspirational quotes by Winston Churchill, Edward R. Murrow, and Marcus Aurelius. Mr. Kaplan is also president of the board of directors at New York's 92nd Street Y, a prominent cultural organization that is a magnet for New York's elite. And he is a benefactor of Eternal Jewish Family, a group dedicated to uniform rules governing conversions to Judaism whose leader resigned last year amid an alleged sex scandal. In some cases, Mr. Kaplan has invested in gold miners that have also attracted the attention of fellow billionaires, such as George Soros and John Paulson. Mr. Kaplan put money into one firm, Gabriel Resources Ltd., in late 2007 after Mr. Paulson, who made billions of dollars betting against housing markets, mentioned how low the stock had fallen while they attended "The Nutcracker" at the New York City Ballet. "I'm there," Mr. Kaplan recalls was his response. In early March, Mr. Paulson's firm, Paulson & Co., and Quantum Partners, Ltd., an investment fund run by Soros Fund Management, invested $100 million and $75 million, respectively, in NovaGold Resources Inc., a Canadian miner, paying $5.50 a share. Their move came a year after Mr. Kaplan, who has $69 million invested in the company, acquired 30% of the firm for $1.30 a share. Gold prices are up 7.4% this year, after rising 24% last year, which was the ninth straight up year for bullion. Mr. Kaplan thinks that greater gains are coming. "I wouldn't even say we're in a bull market yet," he said. But Mr. Kaplan has concentrated risk in a volatile sector, and he knows the potential pitfalls better than most. In 2008, for instance, a company that Mr. Kaplan founded, Apex Silver Mines Ltd., went bankrupt, felled by the terms of a loan made after Mr. Kaplan left the company in 2004. The company emerged from bankruptcy last year and now operates as Golden Minerals Co. In January 2009, Mr. Kaplan received a so-called Wells notice from the Securities and Exchange Commission related to what the company said were "impermissible payments" of $125,000 to government officials by executives at a South American subsidiary. The SEC delivers Wells notices to inform recipients that it may bring an enforcement action, providing an opportunity for the recipient to persuade the agency not to pursue charges. No charges have been filed against Mr. Kaplan. An SEC spokesman declined to comment. Mr. Kaplan's current investments also carry risk. Gabriel Resources owns Europe's biggest undeveloped gold deposit, in Romania, but has been waiting for government approval for years. He has $100 million at stake in the company. Mr. Kaplan acknowledges the dangers involved in investing in small mining companies. "It's not the kind of thing I would suggest for widows and orphans," he said. And, he added, he isn't in a rush to cash in on his gold investments. "If I am right about the big picture," he said, "I will be rewarded for my patience." * * * 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:
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| ‘Sell Gold, Buy Oil: The Numbers Are Clear’ – Oh Really? Posted: 22 May 2010 06:12 AM PDT
A website called Chart Facts has an article on SeekingAlpha from yesterday called "Sell Gold, Buy Oil: The Numbers Are Clear." While attempting to restrain some of the sarcastic tone I sometimes exhibit, I would like to critique this article point for point. The article states:
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| Investing in Rhodium: World’s Most Expensive Metal Posted: 22 May 2010 06:12 AM PDT Wealth Daily submits: By Luke Burgess It's one of the most exotic metals in the world. 100 times rarer than gold … 150 times more expensive than silver. In fact it's the most expensive of all precious metals. Yet no matter its rarity or cost, this metal is absolutely vital to the rapidly recovering automobile industry. The metal I'm talking about is rhodium. The World Rhodium Market Rhodium — along with platinum, palladium, ruthenium, iridium, and osmium — is part of a group of elements referred to as the platinum group metals (PGMs) or platinum group elements (PGEs). Platinum group metals have similar physical and chemical properties, but rhodium is the rarest. Some of rhodium's principal applications are as a finish for jewelry, mirrors, optical instruments, in electrical connections, and in aircraft turbine engines. But the predominant use of rhodium is in catalytic converters for automobiles, for which — especially in diesel engines — the metal has no substitute. As much as 80%-90% of annual rhodium supplies go into the production of automotive catalytic converters, which convert harmful gases from auto exhaust into less harmful substances. Rhodium is exceedingly rare. And there are no pure rhodium mines in existence; rhodium is produced entirely as a byproduct of platinum and/or nickel mining. This means global rhodium supplies can not respond to changes in demand. So if the supply of rhodium is short, prices will rise drastically — and fall just as fast if demand eases off. There are less than ten significant rhodium producing mines in the world, most of which are located in South Africa, which supplies over 80% of the world's demand for rhodium. But recent power shortages in South Africa have forced mining companies to decrease — and sometimes even completely halt — rhodium production, with no clear resolution to the crisis in the foreseeable future. This has caused sharp deficits in the supply/demand dynamics of the rhodium market in recent years. Annual rhodium production is already extremely limited. Only about 25 tons of rhodium are mined each year. Compare that to the 2,350 tonnes of gold mined in 2009, or the 220 tons of platinum mined each year …
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| Jim Rickards on King World News Posted: 22 May 2010 05:56 AM PDT
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| The Giant Banks, Federal Reserve and Treasury Have All Blackmailed America Posted: 22 May 2010 05:52 AM PDT
As I wrote last October:
I noted in November:
As Bloomberg notes today:
And Tyler Durden provides details of how the Fed blackmailed Congress into expanding the Fed's powers:
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| Cap and Trade: A Gigantic Scam Posted: 22 May 2010 05:42 AM PDT
As I pointed out in December:
Jeanne Roberts provides an update at environmental website Celsius:
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| Financial "Reform" Cheat Sheet Posted: 22 May 2010 05:11 AM PDT
The reform bill is a joke. It reforms nothing, it fixes nothing, and it will not prevent the next much bigger crash from happening (with or without Goldman's Supplemental Lack of Liquidity Provider assistance) - just two items that need to be pointed out: $6+ trillion in GSE debt - untouched, $400 trillion in IR swaps: untouched. This is reform? However, if you care enough to know what a bribed and corrupt Congress and Senate have "reformed" here is a useful cheat sheet courtesy of the New York Times.
Also, here is a legal and restructuring perspective on the reform, with a focus on Bill 3217 , targetting "too big to fail" courtesy of former "too big to fail" Goldman Sachs managing director and current Kirkland and Ellis partner Jamie Sprayregen, via TheDeal. Failing to be Too Big To Fail Congress is considering a wide-ranging package of financial industry reforms intended to preclude any future taxpayer bailouts of Wall Street. A key component of this legislation, Senate bill 3217, targets the "too big to fail" dilemma; i.e., that some financial companies are so large and integral to the economy that a threat of their imminent demise effectively requires the federal government to commit or spend massive amounts of public funding toward emergency recapitalization (e.g., Bear, Stearns & Co.; American International Group Inc.; Citigroup Inc.) -- or suffer the destabilizing systemic consequences of a free-fall bankruptcy filing (e.g., Lehman Brothers Holdings Inc.). In other words, unlike conventional bankruptcies, which may be commenced (voluntarily or involuntarily) by a relatively limited universe of parties in interest (a debtor and its creditors) for the relatively limited purpose of enforcing their respective rights, liquidations under S. 3217 may be justified by the government's desire to defend the greater good of nonparties in interest or to influence the economic behavior of market actors. It's not difficult to imagine how this discretion could be used unevenly. Will the government be equally inclined to liquidate a covered financial company if the "excessive risk taking" investors exposed to major losses are union pension funds or public university endowments instead of other Wall Street counterparties or foreign sovereign wealth funds? Or what if the covered financial company is Citigroup or AIG, and among the major shareholders to be wiped out is the U.S. government itself? h/t credit trader
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| It's Official - Cuomo Announces Run For Governor Posted: 22 May 2010 04:59 AM PDT
The worst kept secret in New York politics is out: the Attorney General has officially announced he is running for governor. From nydailynews.com "After months of speculation of when he will make the formal announcement, Cuomo tossed his hat into the ring on his campaign website Saturday morning." Alas, any changes at the top will do nothing to cure the number one problem in both New York, as well as all other states: insolvency. Too bad New York is so bankrupt that pretty much nothing can help, least of all those tens of billions in NOL carryforwards at Wall Street's investment banks which will make sure New York State corporate tax receipt coffers are empty for years to come. For the best indicator of not only Cuomo's campaign but the market's sentiment on New York in general, keep an eye out on New York Citi/State CDS. More from nydailynews.
The Plan from Andrew Cuomo on Vimeo. h/t John
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| A View of the Chinese Economy from Atop the Great Wall Posted: 22 May 2010 04:00 AM PDT We've a little something different for you this weekend, fellow reckoner. As you know, we've been here in the capital of the Middle Kingdom for the past week. Our Reckoner-in-Chief, Bill Bonner, is here too, along with Addison Wiggin and Mayer's Special Situations editor, Chris Mayer. We've toured the malls, the walls and the halls, met with a fantastic group of local experts and eaten some of the finest food man ever tasted. And we also asked a lot of questions. After a hectic week of meetings and dinner table discussions, we wound-down a little on Friday with a winding horseback ride out to the Great Wall. As far as walls go, they don't come any more impressive than the Chinese monument. It's simply spectacular. Since we were out there…and since the China economic story is, in many ways, a global one…and since we were there with a great group of investors…and since, well, since we hadn't written anything for the weekender yet, we decided to take a little footage of the occasion. The following clip is a bit of an impromptu Q&A between yours truly and Mr. Mayer. The sound quality might not be all it could be, and we're still a little out of breath after the hike up to the location, but hopefully you'll enjoy our special video edition from the Great Wall of China…
Joel Bowman A View of the Chinese Economy from Atop the Great Wall 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."
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| NY Fed President: "The Recovery Is Crumbling" Posted: 22 May 2010 03:54 AM PDT [T]he recovery is not likely to be as robust as we would like for several reasons.More Here.. Central Falls Rhode Island - Bankrupt - Goes Into Receivership More Here.. 
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| Jim Rickards Discusses Financial Warfare Posted: 22 May 2010 03:50 AM PDT
Jim Rickards, who some may say has gotten a little too much media exposure recently, is on King World News this morning, discussing the presentation he gave to the US Treasury (closed to the public) in which he lectured Tim Geithner on financial warfare, read China, and how flawed trade policies can impact this ever so critical and increasingly tenuous relationship. To be sure, it is better late than never that someone advised the UST on what the right path is. Unfortunately, righting the US(S) Titanic at this point is impossible as it would mean undoing 2 years of flawed actions and policies, and the cost would be unbearable. Another topic touched upon is the recent correction in gold. The price move over the past week should come as no surprise to anyone. On May 19th we noted Goldman's most recent move to a bullish stance in gold, and we concluded that "we may well be in for a gold retracement, at least from a purely technical standpoint, as Goldman "distributes" its newfound gold holdings" as Goldman moved to sell its gold to whatever few clients it has left. Sure enough, $70 dollars lower later, Goldman's ever-angrier clients who listened to this most recent horrendous tactical call, are only left with a receipt for a metric ton of KY. The gold move is nothing more than liquidation of real assets to cover margin calls in imaginary ones, such as LBO bonds which have moved from 10 cents on the dollar to par during the melt up, and are now seeing a bidless environment, a groupthink phenomenon of which a plunging FDC is the prime example. Those who have no reason to sell gold should obviously hold right - Rickards notes: "for every seller there is a buyer. The sellers are the daytraders, speculators and people in distress who need to raise cash, buyers could be foreign sovereigns, China, Russia, India, so we could be seeing a move from weak hands into strong hands. I see gold at $2,000 in the short-term, and $5,000 in the long-term." Also discussed is Germany's ban on naked shorting, which Rickards applauds, not so much as a policy move, but as a symbolic stand by European sovereigns against the bullying power of Wall Street, something we fully agree with is long overdue. "Merkel will definitely be supported by others. I know the French were a little but upset that she did it, but they are not upset because she did it, but that she did it first. Sarkozy will join in." Curiously Rickards is very much against CDS - fair enough, however the problem with that is that eliminating the most natural way to hedge long credit positions (which make no mistake is what CDS really are all about, good luck finding cash bond borrow in some obscure HY name, even with market monopolist Goldman, or especially with Goldman if it has soaked up all the cash shorts) will have an adverse impact on the market one thousand times worse than banning all shorts, not just naked, in equities. On the other hand, just the expectation of a global CDS short, without recourse mechanism to hedge bond exposure, would push the S&P to our very long-term S&P target of approximately 0, as it would immediately force an unwind in that biggest of all uncharted territories, the IR OTC swap market. Some critical insight from Rickards in terms of European geopolitics is the following: "People get so hung up on economics, and efficient markets, and all that which has been largely discredited at this point. But these are NATO allies. Greece controls the ceiling of the Eastern Mediterranean and the Aegean, they have a very robust military budget. Same thing with Spain. Spain's been a very important NATO ally throughout the cold war, Italy etc. Can you imagine if during the cold war the Soviet Union had undermined all the countries, it would have been the start of World War III. And yet we are letting investment banks do the same thing. We are letting investment banks undermine the finances, cast doubt on the credibility, create civil unrest, riots, death. It's the kind of thing that in a military frontal assault would be repelled, but somehow we let Wall Street attack the countries and do nothing about it. I am glad that someone is finally standing up, and I expect that Merkel will be joined by others. I am not against speculation. Let speculators put up some money, let them do on an exchange, let the pricing be transparent, let them do variation margin... This no money down shadow credit default swap market is completely destructive." A little hyperbolic but you get it. For those of you who just can't get enough of Jim, you can follow him on twitter @JamesGRickards Full King World News interview with Jim Rickards can be found here.
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| Posted: 22 May 2010 03:10 AM PDT
Zachary Goldfarb of the Washington Post reports, SEC launches inquiry into market's 'flash crash':
One thing I try to explain to people is that erratic market moves have much less to do with fundamentals and more to do with banks' prop desks and hedge funds flows. Big banks made a killing in the first quarter of 2010. In fact, the FDIC reported that nationwide, U.S. banks reported an aggregate profit of $18 billion during the first quarter, up considerably from the $5.6 billion profit recorded in the first three months of 2009. Where are these profits coming from? Certainly not from lending to small & medium sized enterprises. The bulk of the profits at the big banks are coming from trading revenues and most of these are driven by huge algorithmic trading activities performed by an army of PhDs running ultra fast supercomputers, looking for the slightest discrepancy in asset prices. And what about hedge fund flows? Earlier this week, Boyd Erman of the Globe & Mail reported, Hedge funds rebound, head for $2-trillion in assets:
Two trillion in hedge fund assets may not sound like a lot, but when you add leverage, it's huge. Many of the larger hedge funds also engage in algorithmic trading and OTC derivative trading, adding more volatility in market moves. I bring this up because it baffles me when "experts" compare today's markets to those of the 1990s, 1980s or 1930s! The structural changes in the markets are huge, bringing more volatility in periods of uncertainty, and less in periods of stability. And what really concerns me is what effects this will have on defined-benefit plans and individual retirement plans. Moreover, the Prime Minister of Greece, George Papandreou, raised an important point last week in his interview with CNN's Fareed Zakaria. Mr. Papandreou addressed the "paradox" of bailing out banks that turned around and funded hedge funds that speculated on sovereign debt:
On Friday, I had lunch with a buddy of mine that came in from Greece. He told me that he was surprised with the speed that Papandreou's government is moving to implement reforms. He also told me that many of these reforms are hurting individuals like his aunt who was a schoolteacher for many years and is now seeing her pension decline from 1,200 euros a month to 900 euros a month. As far as speculators are concerned, my friend told me: "I told you a long time ago that major financial regulations are coming". Indeed, politicians are not going to let hedge funds and banks run amok, threatening the integrity of the capital markets and the global economy. Let me be clear on something: I'm not against hedge funds or banks with huge prop desks. They provide liquidity to markets and hedge funds that deliver true alpha (not levered beta) are worth paying fees for. But the paradox remains. Banks that got bailed out are funding hedge funds and so are public pension funds looking to increase their leverage to meet their required actuarial rate of return. What worries me is that by doing this, they're increasing systemic risk. Without taking into account their collective actions, they're sowing seeds of more market chaos. This is something which needs to be addressed on a global level. Individual countries are powerless to deal with these structural changes and their implications for global systemic risk. Finally, as you listen to Mike Ryan, head of wealth management research for the Americas at UBS Financial Services Inc., talking with Bloomberg's Matt Miller and Carol Massar about the outlook for U.S. equity markets and prospects for a continued U.S. economic recovery, keep in mind the structural changes I discussed above. Nothing shocks me any more. Erratic moves have become the norm, not the exception.
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| Silver market analyst Butler comments to KWN on last week's smashdown Posted: 22 May 2010 02:36 AM PDT 10:30a ET Saturday, May 22, 2010 Dear Friend of GATA and Gold (and Silver): Silver market analyst Ted Butler today tells King World News' Eric King that while last week's smashing of the silver market by large commercial traders could not have been more obviously manipulative, he doesn't think J.P. Morgan Chase was behind it this time. He thinks the outlook for silver is now 80 percent bullish and 50-60 percent bullish for gold. Butler is losing patience with the U.S. Commodity Futures Trading Commission's failure to act against manipulation in the metals market but says he's still hopeful. The interview is 10 minutes long and you can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Join GATA here: World Resource Investment Conference * * * 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 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/
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| Silver market analyst Butler comments to KWN on last week's smashdown Posted: 22 May 2010 02:36 AM PDT 10:30a ET Saturday, May 22, 2010 Dear Friend of GATA and Gold (and Silver): Silver market analyst Ted Butler today tells King World News' Eric King that while last week's smashing of the silver market by large commercial traders could not have been more obviously manipulative, he doesn't think J.P. Morgan Chase was behind it this time. He thinks the outlook for silver is now 80 percent bullish and 50-60 percent bullish for gold. Butler is losing patience with the U.S. Commodity Futures Trading Commission's failure to act against manipulation in the metals market but says he's still hopeful. The interview is 10 minutes long and you can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Join GATA here: World Resource Investment Conference * * * 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 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/
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