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Thursday, May 27, 2010

Gold World News Flash

Gold World News Flash

Reading International: Cashing in on Australia

Posted: 26 May 2010 07:09 PM PDT

Movie box office isn’t the only business that’s popping for theater exhibitor Reading International (NASDAQ: RDI) these days. In fact, a resurging property boom in Australia, particularly in Melbourne, is likely to have a greater effect on Reading’s near term market value than Avatar, Alice, Shrek or anything else on the silver screen.

That’s because Reading isn’t just a 466-screen exhibitor that has the 3rd, 4th, and 12th largest share in Australia, New Zealand, and the US, respectively. Reading also owns valuable real estate parcels that have appreciated, in some instances, for over more than a decade, from surrounding population growth, substantial up-zoning, construction, lease-up and, of course, inflation.


Complete Story »


The CFTC Says 'NO' to Silver Analyst Ted Butler

Posted: 26 May 2010 07:07 PM PDT

After not doing much of anything during most of the Far East trading session on Wednesday, gold spiked up to around $1,032 spot at 4:00 p.m. in Hong Kong... just 30 minutes before London opened for their Wednesday trading day. The price pretty much stayed at that level for the next four hours... and then began a gentle decline starting at 12:30 p.m. in London... shortly before New York opened. This decline lasted until 4:00 p.m. Eastern time... which was its absolute low of the day... recorded as $1,117.50 spot. From there, gold recovered almost back to its close on Tuesday. But, all in all, it was basically a nothing sort of day. Silver gained about a percent during Far East and early trading in London. The peak price for silver [around $17.61 spot] was at the London silver fix around noon local time. During the next couple of hours, silver fell to its low of the day in early New York trading... with the low price tick of $17.34 coming shortly after 9:00 a.m....


We Have a New Gold Standard: Marc Faber

Posted: 26 May 2010 07:07 PM PDT

I wouldn't read a thing into yesterdays price action in gold. It spent the entire day range-bound between $1,120 and $1,130. The highs and lows aren't worth mentioning. Nothing to see here, folks! It was the same for silver. There's nothing to talk about in this chart. The dollar has been an interesting case study over the last couple of days. A rally started about 2:00 a.m. Eastern time on Wednesday morning... and, in fits and starts, added about 80 basis points to its price over the next 36 hours... yet the precious metals prices barely reacted at all. In times past, a dollar rally of this magnitude would have resulted in a rather significant sell-off in both gold and silver. It certainly didn't happen this time... and as I mentioned in my column yesterday... we've see a lot more of that kind of action recently, where the gold price is not necessarily tied to the dollar action. As other commentators have pointed out... the precious metals are now bac...


Gold & Silver Daily: Farewell To All The Emperors - Feb 19, 2010

Posted: 26 May 2010 07:07 PM PDT

Farewell To All The Emperors Well, the rally that began at gold's low on Thursday morning at 4:00 p.m. in Hong Kong's afternoon trading session, had a few legs... and gold was up about $10 or so by 8:30 a.m. in New York. Shortly after that, gold really took off and added another $12 or so onto the price before running into the usual brick wall at the London p.m. gold fix at 3:00 p.m. London time... 10:00 a.m. in New York. From there, gold dipped briefly before running up to another new high, which was the close of trading in London at 4:00 p.m... 11:00 a.m. in New York. Gold sold off about $8 or so from that high... and, wonder or wonders, continued to climb to its absolute high of the day which was at precisely 4:30 p.m. Eastern time when the interest rate news hit the tape. Gold fell $15 in half an hour... and basically closed at that price... which was $1,105.20 spot. And, as I me...


Tokyo Rose Lives In Another World

Posted: 26 May 2010 07:07 PM PDT

The following is automatically syndicated from Grandich's blog. You can view the original post here May 26, 2010 06:52 PM While numerous people have far worse explanations, I’m going to just assume Tokyo Rose lives in another world and visits there when he’s asked for his gold opinion. I concluded that after hearing him claim in this interview that the new golds over the last several years have been weaker and weaker… I know you just said what the %&*@????????? Yes, any technician who has studied technical analysis for more than a day would tell you just the opposite, especially after gold broke out from a multi-year reverse head and shoulders pattern last year. But you’ve to pity this man* – really. For almost a decade, he has been on the wrong side over and over again. Just the other day he said when asked about gold manipulation he did his usual tin-hat dance and said if there has been manipulation given the rise already in gold – bring on more...


Yukon Gold Rush Sees Good Hit in Top of First Inning

Posted: 26 May 2010 07:07 PM PDT

The following is automatically syndicated from Grandich's blog. You can view the original post here May 26, 2010 07:10 PM I’ve spoken about the Yukon Gold rush play this summer in the Yukon. Late today we saw some very good news from one of the players there. To hit so early on a drill program not only shows their exploration model works but the mineralization and pattern of better grades near the margins of the zone have great similarity to Underworld Resources Golden Saddle Discovery. This is a great start for this 2010 Yukon gold rush season. Silver Quest Resources Boulevard property borders this discovery on Kaminak’s Coffee property. [url]http://www.grandich.com/[/url] grandich.com...


Jim?s Mailbox

Posted: 26 May 2010 07:07 PM PDT

View the original post at jsmineset.com... May 26, 2010 07:14 AM Greetings Jim, The Gold Currency Index has quickly returned to recent all-time highs following the sharp correction last week, indicating that the current uptrend has significant buying support.  Technical indicators are slightly bullish overall, and period of consolidation is the most likely scenario over the near-term, although another long-term breakout is certainly possible.  Once again, the GCI is positively diverging from gold in US dollars as the latter remains well below its recent all-time high. Best, CIGA Erik Prometheus Market Insight [URL]http://www.prometheusmi.com[/URL] Click charts to enlarge 5-Year Note Auction Results CIGA Eric Yet another treasury auction that can only be classified as "it’s not a problem until it becomes a problem". Direct bidders, anonymous and impossible to track, took down 15% of the total accepted bids. This is a big number that as little as a ...


Hourly Action In Gold From Trader Dan

Posted: 26 May 2010 07:07 PM PDT

View the original post at jsmineset.com... May 26, 2010 10:45 AM Dear CIGAs, Today was "Back to the Reflation Trade, Part Deux". Hedge fund money came out of bonds and into just about everything else. Tomorrow? Who knows? For today, it did not matter whether the Dollar was up and the Euro was down – all that mattered was that equities were higher and risk appetite was restored as can be seen by the fall in the Yen alongside the bonds. Gold continues to get a firm bid and was able to punch through the 10 day moving average setting off some light buy stops as well as attracting some new buying. The chart continues to look constructive with last Friday's spike down towards $1165 now being confirmed as good technical support on the downside. Gold's ability to get back above $1200 after such a rather small retracement in price is very revealing for it shows that there are eager buyers waiting on the downside to acquire the metal. I am especially interested in seeing this Friday's COT da...


In The News Today

Posted: 26 May 2010 07:07 PM PDT

View the original post at jsmineset.com... May 26, 2010 01:23 PM Jim Sinclair's Commentary If you were in Greece, Italy, Spain, Portugal or Ireland and you read the following, would you prefer the euro which may lead to eventually holding your previous currency or would you prefer gold? Restructuring as I have said to you is the cover word for bankruptcy. If Greece goes back to the Drachma the Drachma will dissolve instantly. Greece Debt Restructuring Is Inevitable, Gross Says (Update3) By Cordell Eddings and Julie Hyman May 26 (Bloomberg) — Pacific Investment Management Co.'s Bill Gross said restrictive lending rates and austerity measures that slow growth will leave Greece with "no way out" of a debt restructuring. "The growth required in order to shoulder Greece's debt burden is so excessive and the fiscal restrictiveness being imposed on the country is so restrictive they there will be no way out," Gross said, in an interview with Bloomberg Television. "Restruct...


Major Market Technicals & QE

Posted: 26 May 2010 07:06 PM PDT

Stewart Thomson email: [EMAIL="s2p3t4@sympatico.ca"]s2p3t4@sympatico.ca[/EMAIL] May 25, 2010 1. In the bigger picture, GOLD is stomping on all paper money, and has for all of history. All paper monies have gone to zero, and gold has not lost any value over 5000 years. Not one iota of value. Therefore, Gold, alone, must form the backbone and foundation of all investment portfolios. I totally reject the worldwide view that gold is insurance, let alone Elmer Fudd Public Investor’s idea that gold is “high risk”. Gold is not “insurance”. 2. Gold is the foundation of financial excellence. For those of you who have an interest in excellence, I would suggest you turf the “insurance” thinking, and replace it with gold foundation thinking. Welcome to the Asian mindset. Buy US dollars for insurance. Buy gold for the foundation of your wealth building portfolio. Thanks for your understanding! 3. In the i...


How Do You Answer the Question?

Posted: 26 May 2010 07:06 PM PDT

Never in a million years would I have believed that was possible, but happen it did. Print enough money and the Fed could just as easily negate a broken yearly cycle low. And if you think he won’t do it I have some ocean front property here in Las Vegas I’d like to sell ya? Sell short? No way no how. Not even with your money. Let’s face it the mathematics on the short side are just not conducive to getting rich. It took a year and a half for the market to drop 58% in the second worst bear market in history. Sure one can leverage up but if you happen to get hit with a vicious bear market rally or the rules are changed (ban on short selling) you run the risk of losing everything. Need I remind everyone that leverage is what is bringing down the global financial system. Leverage is like walking through a dynamite factory with an open flame. Sure you might survive but you’re still an idiot. Trading bear markets is tough to do even if the bea...


When Technicals Fail, Investors are Better Served

Posted: 26 May 2010 07:06 PM PDT

Perhaps more now than ever in history (save for a few depressions), technical levels on everything from stocks, bonds and even precious metals have disappeared. No longer are support and resistance lines, moving averages, or oscillators stealing the show. Instead, investors are buying and selling with their gut, and overall, it's probably for the better. Investing by the Gut Gut feelings may be the fear of short-term traders, but for long term investors, it's entirely positive. The fact that the market is no longer responsive to long range trends and short term support and resistance lines indicates that investors are looking towards the future and have nearly forgotten the past. In just the last few weeks, gold has made a new high, silver has risen through various trend lines, and the technicals have all but been thrown out the window. Today is a great day for long term investors. Why Technicals Matter Whether you're a technical analyst or an investor j...


Fed Confirms What Hard Asset Investors Already Knew

Posted: 26 May 2010 07:06 PM PDT

Exit plan? What exit plan? The Federal Reserve issued a report before Congress in an attempt to clarify its stance during one of the worst recessions since the Great Depression. The Fed, as always, said very little, but did make one thing very clear—the Fed has no idea what it is doing. Zero Exit Strategy To say the Fed has no exit strategy may be a little unfair to what is perhaps one of the most powerful entities in the US economy. The Federal Reserve, attempting to settle fears about a double dip, made sure to imply that it would not seek to sell its recently purchased assets until the dust from the financial plunge settles. The Fed will also seek first to raise interest rates before shrinking the monetary base. Flexing its Muscles Naturally, the Federal Reserve has plenty of financial muscles to flex. The banking cartel can raise interest rates, increase or decrease the money supply, and has virtually every sector of the economy in the palm of its h...


Roger Wiegand: EU Bailout Just Delays Inevitable

Posted: 26 May 2010 07:06 PM PDT

Source: Barbara Templeton and Karen Roche of The Gold Report 05/26/2010 Replacing most of Europe's colorful notes and various coins less than a decade ago, the euro is on the brink of extinction, according to Trader Tracks' Roger Wiegand, sharing news and views of Euroland's critical condition with Gold Report readers in this exclusive interview. Roger says the euro at $1.20 is the "line in the sand where big trouble will start. . .and that's dangerously close." On the other side of the world, he sees China doing well now, but doesn't pin his hopes on China as the engine for global economic growth as so many others do. In fact, he says things there are "fraying a bit on the edges." So, is there a white horse waiting in the wings to lead the world back to economic good health? Read on. . . The Gold Report: You put a rather provocative quotation in a recent Trader Tracks. It says: "The destruction of a currency does not follow a straight, predictable course. . .like ...


$13 Trillion, $1200, $220, and Other Important Figures

Posted: 26 May 2010 07:06 PM PDT

The 5 min. Forecast May 26, 2010 12:49 PM by Addison Wiggin & Ian Mathias [LIST] [*] Coincidence? National debt tops $13 trillion, gold tops $1,200 [*] The chart that says gold has only begun its epic bull market [*] $220 oil? The military orders that could push oil to the breaking point [*] Caffeine, Alzheimer’s disease and the research that could fund your retirement [*] Readers hurl “BRIC bats” in the mailbag [/LIST] As we sat down to write this morning, the cell phone began vibrating against the desk. Alice Gomstyn from ABCNews.com wanted to know what we thought about the national debt crossing the $13 trillion threshold. Uh… the same as we thought about it crossing $12 trillion less than six months ago. Not good. (You can read the story here.) But what do we know. We’ve been whistling Dixie on this subject for the better part of our adult lifetime. No one really cares except when these psychological boundaries are crossed… ...


GLD ETF Adds 978,424 Troy Ounces of Gold Yesterday!

Posted: 26 May 2010 07:06 PM PDT

Well, there wasn't a snowball's chance in hell that the bullion banks were going to allow gold price to stay above $1,200 during the Comex trading session yesterday... and they didn't. The gold price edged over the $1,200 mark a couple of times during floor trading on Tuesday... but there was always a not-for-profit seller there to knock it gently down again. Gold did manage to close above $1,200... but that was in electronic trading after the Comex close... and that didn't matter, because option expiry had already passed. Once again it was "mission accomplished" for the bullion banks... as all those tens of thousands of call options expired out of the money. Gold's low [around $1,186 spot] occurred at the London open... and the high [$1,205.50 spot] occurred moments before New York electronic trading ended at 5:15 p.m. Eastern time. The silver market was more 'volatile'... as it got clocked for more than 30 cents about two hours after Tuesday morning trading be...


You Can Hold Gold in Your Bank Account

Posted: 26 May 2010 07:06 PM PDT

By Dr. Steve Sjuggerud Wednesday, May 26, 2010 Your cash in the bank earns you next to nothing… Meanwhile, the government has the ability to print all the money it wants to. In short, your wealth in the bank is steadily eroding. Your dollar is losing purchasing power year after year. What can you do to protect your savings? My friend Frank Trotter of EverBank has an innovative solution… Hold some of your savings at the bank in gold. I had dinner with Frank on Monday. He explained to me that, through EverBank's "Metals Select Gold" accounts, you can keep a portion of your savings at the bank in gold, instead of in dollars. "So, Frank… I could keep my everyday money in my regular checking account… and then I could keep my longer-term savings split between a regular savings account and gold?" "Yes." "But what if I need to convert my gold at the bank into cash to pay for a big expense?" "No problem." How long will it take to get my ca...


LGMR: Gold Hits 1-Week High on "Massive Flows", Scramble for "Too Few Safe Assets"

Posted: 26 May 2010 07:06 PM PDT

London Gold Market Report from Adrian Ash BullionVault 12:50 ET, Weds 26 May Gold Hits 1-Week High on "Massive Flows", Scramble for "Too Few Safe Assets" THE PRICE OF GOLD in wholesale dealing rose throughout Asian and London trade on Wednesday, touching 1-week highs above $1215 an ounce as world stock markets bounced from their recent plunge. Crude oil also rallied, regaining $70 per barrel. Silver prices caught up with gold, rising 3.3% from last week's finish to $18.68 an ounce. "Support [in gold] still at the April high, continues to limit the downside," reckons Phil Smith in his Reuters Market Technical Analysis from Beijing, noting the sharp rally in gold from last Friday's drop to $1178. Exchange-traded gold trusts are seeing "massive inflows given the current economic climate," says one London dealer. New York's SPDR gold ETF added more than 30 tonnes of metal to its holdings on Tuesday, the sharpest increase both in absolute and percentage t...


A Tale Of Irrational Premium (And Risk): PHYS

Posted: 26 May 2010 07:06 PM PDT

Market Ticker - Karl Denninger View original article May 26, 2010 07:05 AM Is "paper gold" really less safe than "100% hard-backed gold"?  One wonders after the price action of this morning. For those who don't follow this stuff, there has been a lot of digital ink on the Internet claiming that gold ETFs, specifically GLD, might not actually have the gold they claim to have - that is, that there are enough "weasel words" in the prospectus to allow them to have futures contracts and similar instead of actual physical metal. Eric Sprott appears to believe in this, and in concert with that belief he created a new ETF that is claimed to hold 100% physical bullion behind every share, at roughly 1/100th of an oz per share of the ETF. As you can see, this ETF has performed well - until today. But how has GOLD performed?  Let's look at the /YG futures contract: So let's make a few assumptions here - that one "PHYS" share is roughly 1/100th of an ounce of physi...


Insider Buying

Posted: 26 May 2010 07:06 PM PDT

The following is automatically syndicated from Grandich's blog. You can view the original post here May 26, 2010 05:09 AM There are numerous reasons for insiders to sell but IMHO, very few to buy other than thinking the stock is undervalued. This is especially true IMHO when it comes to junior resource stocks since insiders usually limit their share ownership to what they’ve acquired through stock options and private placements (and often use family members as buyers). A very good website to track these buys and sells in www.canadianinsider.com (Put symbol under search link) Grandich clients with recent insider buying are: Crescent Resources CRC Heatherdale Resources HTR (Very large purchases by key Hunter-Dickinson partner). Oromin Exploration OLE Rodinia Minerals* RM Spanish Mountain Gold SPA Silver Quest Resources SQI [url]http://www.grandich.com/[/url] grandich.com...


Gold & Silver Daily: 'Greece' Is The Word - Feb 13, 2010

Posted: 26 May 2010 07:06 PM PDT

'Greece' Is The Word Gold's absolute high price on Friday was the spike that occurred shortly after the open in Sydney. The price looks like it got pretty close to $1,100 spot before the bullion banks did their thing. From there, it was slow grind down to around $1,087 spot, which occurred shortly before 10:00 a.m. in London... then gold lost a quick ten bucks, which it recovered by 9:00 a.m. in New York before losing that amount once again going into what looked like an early London p.m. gold fix about 9:40 a.m. in New York. The absolute low for gold yesterday [around $1,074 spot] occurred at the top of yesterday's dollar rally... which was around 11:30 a.m. in London... 6:30 a.m. in New York. The New York low [$1,076.10 spot] occurred at 9:40 a.m. And from there, as has been the case lately, gold rallied right into the New York close at 5:15 p.m... and closed on its [New York] high of the day. Silver's price, as usual, was more 'volatile'. It's absolute high pri...


Top Stocks Based on PEG and Momentum

Posted: 26 May 2010 06:52 PM PDT

Scott's Investments submits:
I have begun conducting the following screen on a monthly basis. Early out-of-sample results have been positive, especially during bullish environments. Aprils' list is here, March's list is here, February's list is here and January's here. The screen looks for the following:
    • earnings growers still reasonably priced as judged by the PEG ratio
    • low debt
    • a history of high return on equity and investment, and
    • price momentum as gauged by the percentage the stock is trading to its 250 day high.
January's list returned 1.39% vs .57% for SPY. February's list returned a solid 11.78% vs. 6.77% for SPY. March returned 7.91% vs. 4.23% for SPY and April was a tough month returning -11.57% vs -11.52% for SPY.

When the screen results in more than 10 stocks I have also started tracking returns of the top 10 stocks at the beginning of each list, the top 10 are selected based on fundamental factors. The top 10 on March's list returned an average of 10.77% and the top 10 for April did slightly better than the entire list returning -8.01%. For the full list of stocks and results, please see the right hand side of Scott's Investments.

Complete Story »


Gold Looks Solid

Posted: 26 May 2010 06:39 PM PDT

Jeff Pierce submits:

I like gold, and it’s important to be aware of the negative divergence that’s going on right now between price and RSI. I’ll be watching to see how we react when we hit the 1270 area and see if it proves to be an area of resistance.

If we blow right through it we’re heading much higher. If gold gets rejected at this trendline then we could be in for a period of consolidation or possibly a pullback.


Complete Story »


Hidden Dollar Swap Hammer

Posted: 26 May 2010 06:13 PM PDT

USDollar swap lines have been revived, rejuvenated, and applied. They are critical in sharing the workload in monetary expansion, the inflation machinery. The US Federal Reserve issued the following press release on May 9th, heralding the facility. It enabled the printing of money for immediate usage by foreign nations, as they essentially print their own money but use the USDollar wellspring as conduit.


One Way or T'other the Gold Price Will Move Big Tomorrow

Posted: 26 May 2010 06:06 PM PDT

Gold Price Close Today : 1211.10Change: 15.40 or 1.3%Silver Price Close Today : 18.292Change 52.9 cents or 3.0%Platinum Price Close Today: 1521.30Change: 11.30 or 0.7%Palladium Price Close Today:...

This is a summary only. Visit GOLDPRICE.ORG for the full article, gold price charts in ounces grams and kilos in 23 national currencies, and more!


Profit/Protection from Chaos & Cartel Intervention: 2nd Half 2010 Forecasts

Posted: 26 May 2010 06:03 PM PDT

The Challenges faced by the Economy and Markets are Systemic and are not merely a function of any particular problem (e.g. Greece, PIIGS, China Bubble, U.S. Debt) however daunting each of these may be. It is the combination of these interrelated problems that creates The Systemic Risk Problem.


Wall Street Keeps The Laughs Coming

Posted: 26 May 2010 06:01 PM PDT

We should note that bullion yesterday reflected none of the ambiguities that have caused stocks to trace out conniptions each day on their respective charts. Comex August Gold tacked $30 onto the previous day's lows, and the futures were holding the gains with easy aplomb as we went to press late Wednesday night, trading around 1215.00. Bears had better dive for cover if the August contract closes above that price today, since that would portend instant additional upside to at least 1261.80.


Has the Panic Abated?

Posted: 26 May 2010 05:43 PM PDT

prieur du plessis Prieur du Plessis submits:

After the market meltdown on Monday and for the first part of Tuesday and subsequent reversal, Kevin Lane of Fusion IQ said:

We thought it would be wise to review our VIX deviation from trend (i.e. its deviation from its 50-day moving average) and Put/Call indicators to see what they implied. As seen in the charts below, the VIX deviation indicator from trend threw off the second highest reading it has given since 1996. Today’s reading was surpassed only by the November 2008 reading, which led to a 25+% rally over the following two months. Additionally our CBOE Total Equity and Index Put/Call readings were also very high.


Complete Story »


The Great Depression: History Repeating

Posted: 26 May 2010 05:35 PM PDT

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.


The M3 figures - which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance - began shrinking last summer. The pace has since quickened.
The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

Bad news: we're back to 1931. Good news: it's not 1933 yet

"It's frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.
The US authorities have an entirely different explanation for the failure of stimulus measures to gain full traction. They are opting instead for yet further doses of Keynesian spending, despite warnings from the IMF that the gross public debt of the US will reach 97pc of GDP next year and 110pc by 2015.
Larry Summers, President Barack Obama's top economic adviser, has asked Congress to "grit its teeth" and approve a fresh fiscal boost of $200bn to keep growth on track. "We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on," he said. 

Sprott PHYS vs. GLD ETF - Pairs Trade in Gold Funds Works Out Well

Posted: 26 May 2010 05:34 PM PDT

Dan Pritch submits:

Wednesday, the Sprott Physical Gold Trust (PHYS) completed a follow-on offering of trust units at $11.25 per unit. This was performed in order to acquire physical gold bullion in accordance with the Trust’s objective and subject to the Trust’s investment and operating restrictions. In other words, the big selling point of this closed-end fund is that investors can actually request delivery of their gold. Many true gold bugs believe other gold ETFs like GLD could never deliver (or own) the assets should there be a financial panic and a run on physical gold. While Europe’s in shambles, the US has its share of crises in the year ahead, with strategic defaults becoming the “new black” and the government’s insatiable appetite for debt over spending cuts. These fears had resulted in a substantial premium to net asset value (NAV) in PHYS but this follow-on offering priced shares more in accordance with true NAV, dragging the share price down with it Wednesday.

Massive Premium Came Crashing to Earth

Given the fears over paper gold versus the real thing, along with a legitimate benefit to gold tax treatment for other gold investments like GLD (treated as a “collectible”) which should warrant some premium, the premium to NAV on PHYS approached absurd levels earlier in March to the tune of 30% at one point.


Complete Story »


Gross: Is It Possible to Get Out of Debt Crisis by Increasing Debt?

Posted: 26 May 2010 05:30 PM PDT

Edward Harrison submits:

Bill Gross is a bond guy. And in the bond world, the return of capital counts for a heck of a lot more than the return on capital. So, naturally, with debts being socialized from the private to the public sector, Gross has been asking himself and his investors first and foremost which countries will default. To wit, ever since the Dubai World crisis, almost all of his recent monthly newsletters have been about sovereign debt, rather than corporate debt.

Below are a few posts I wrote about his commentary – all of which are about government stimulus "exit strategies" and sovereign risk. Notice Gross’ newfound populist flair, which the titles reflect:


Complete Story »


In a Word, the Problem is “Debt”

Posted: 26 May 2010 05:30 PM PDT

The Case for Gold Book Review

Posted: 26 May 2010 05:26 PM PDT

Asian Metals Market Update

Posted: 26 May 2010 05:04 PM PDT

One bad news story after another comes for the stock markets as speculation that China may review investments in European government bonds spurred concern the credit crisis will worsen.


Gold, Silver and Mining Companies Shaping Up

Posted: 26 May 2010 04:57 PM PDT

We will kick off with a review of the charts for gold, silver and the gold bugs index, the HUI, in an attempt to see where we are now and just where we might go from here. Read More...



The “China Story” is Not Dead Yet

Posted: 26 May 2010 04:52 PM PDT

The city of Harbin lies on the banks of the Songhua River in the northeast of China, in what was Manchuria. This 10th largest city in China is a good place to see how some of the best opportunities in the next phase of China's expansion come together. In particular, there are huge profits sitting out there in the expansion of China's rail and subway systems.

But first, a little context...

Located near Siberia, Harbin is the most Russian of all Chinese cities. The skyline's onion domes and spires evoke St. Petersburg or Moscow. At one time, Harbin was home to the largest Russian enclave outside of Moscow.

Today, it is a key rail hub and inland port like Chicago or Kansas City in the US. Harbin is the largest inland port in the northeast. Five major railways also converge here. They carry crops farmed from the black earth of Harbin and the surrounding countryside. The soil here is among the best in China, nutrient rich and fertile.

Harbin is also an industrial city making all kinds of things. It may be best known for its power equipment. Harbin alone has cranked out about one-third of all the installed capacity of hydro and thermal power in China.

It's this confluence of rail, light industry and agriculture that makes Harbin emblematic of some of the most exciting and promising new opportunities in China. Let's look at the rail network.

Trains, like cars or aircraft, need lots of parts. They need a whole mess of stuff from motors to signaling equipment. China's market for rail components is booming. That's because the Chinese are laying track at a pace that would've made Cornelius Vanderbilt proud. The Financial Times reports that there are plans to lay nearly 19,000 miles of track over the next five years.

At that pace, China will overtake Russia as the world's second largest rail infrastructure. Only the US will be bigger. These railroads will creak and groan under the weight of rail cars loaded with grains as well as coal from China's hinterlands and Mongolia. Harbin is in the middle of it all.

China's market for rail components will grow fivefold in the next three years, to more than $50 billion, according to estimates by McKinsey. In 2010, more than half of all the money spent on rail equipment in the world will be spent in China.

It's not just railroads; China's subway market is already the largest in the world, too. There are currently 10 cities that run 31 subway lines of more than 500 miles. In December, the Chinese government approved 22 new subway lines that will cost at least $129 billion to build.

The growth in this sector is simply staggering. By the end of 2010 alone, China will have 53 subway lines totaling more than 1,000 miles in length and requiring over 6,000 cars. In the next five years, China will add another 600-plus miles to the system, bringing the total number of systems to nearly 90.

So the opportunity for the makers of rail components is obvious. There is an added wrinkle here, though. The Chinese government mandates that 70% of the components have to be produced by Chinese companies. Therefore, the biggest beneficiaries will be you-know-who.

The Chinese rail outfitters are already tough international competitors. They are the low-cost providers. They are also becoming world-renowned for their rail exploits. The Chinese, after all, finally conquered the great permafrost on the road to Lhasa, Tibet.

China's companies are also competing effectively abroad, bidding on work in South America and the Middle East. The main constraint is capacity. Their home market is giving them everything they can handle. It should stay hot for the next few years, at least.

In any event, the best way to get a piece of the action is to buy a Chinese company that makes the stuff the railroads and subways need.

Hearing the phrase "buying a Chinese company," an investor might wince. Investing in China sounds risky, but I wonder how risky it really is and compared with what. The US, for instance, is hardly a safe haven anymore. The line that separates the US and Europe from emerging markets like China may be less than is supposed, at least from an investor's viewpoint.

All this is to say don't let your prejudices blind you to opportunities in so-called emerging markets. Most people still have little idea of just how big the so-called emerging markets have become.

Marko Dimitrijevic, who runs Everest Capital, pointed out in a recent Barron's interview: "The BRIC countries [Brazil, Russia, India and China] are larger than developed Europe. But strikingly to us, the other emerging markets, the non-BRICs, are now larger than US or developed Europe."

Even though emerging markets have been growing fast for years, these facts seem to have snuck up on us. A good analogy might be the old bit about the lily pads on a pond that double their population every day. One day, the pond is half full of lilies. The very next day, lilies cover the whole pond.

The biggest emerging market of all is China. I liked what Eric Kraus, the astute observer and Moscow-based money manager writes about China in his latest letter. He says he is "now almost embarrassed to go on about the secular rise of China - we would not bother were this not the single greatest economic and geopolitical shift of our lifetimes..."

Admittedly, China has its own problems, and it will have dramatic ups and downs. But China in 2010 is something like the US in 1910. It has lots of room to grow.

Some of the cheapest stocks in today's market are the US-listed securities of China-based companies. It's here you can pick up stocks in good companies, with strong balance sheets and owner-operators, growing 25%-plus a year for less than 10 times earnings.

I recently alerted the subscribers of Capital & Crisis to a Chinese company that has the inside track on those metro trains and freight cars. In fact, it's the only Chinese company to have met international standards - and at half of the cost of imports from the competition. It is in prime position to be the vendor of choice in China. In fact, its equipment is so good, it is the only Chinese company exporting to blue chip US companies.

This world-class company is just one example of a "China Story" that is just getting started. But please bear in mind that the investment road ahead in China will not be smooth. Chinese stocks will certainly subject investors to gut-wrenching volatility. But that's just the price of admission to the "single greatest economic and geopolitical shift of our lifetimes."

Chris Mayer
for The Daily Reckoning Australia

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Double Dip Recession

Posted: 26 May 2010 04:49 PM PDT

"Call it a nightmare," says Dave Rosenberg.

Markets all over the world went down again yesterday. The Dow dropped below 10,000 in the morning trading...then came back to give up a modest 22 points by the closing bell.

The Wall Street Journal says it's time to start worrying about a "double dip recession."

We suspect that output will dip below zero again - giving us, technically, a 'double dip' recession. But calling it a recession misses the point. It's not just a pause. It's a change...a Great Correction.

There's something else going on...something much more important and much harder to deal with than an ordinary recession. The feds have thrown everything into the battle to stop this downturn. No matter how you look at it, the ammunition spent in this fight has been spectacular.

And it hasn't worked. Unemployment has actually gotten worse. Private sector credit has declined. And what's this? "Falling home prices raise fears of new bottom," says a headline.

People talk of 'recovery,' but it's now three years after the crisis began and there is no recovery. Instead, there's another crisis on the horizon.

And now the trouble is, the feds don't have much ammunition left. Interest rates are already at zero; they can't go lower. And the federal deficit is already as much as 10% of GDP.

Besides, it's becoming clear that all that ammunition fired off so far was wasted! It got us nothing but more debt.

The problem was never a recession. It was too much debt in the private sector. But the feds misunderstood it. They thought it was a regular recession that they could 'cure' with more credit and more spending. So, they added trillions of new debt in the public sector!

They claimed to have spared the world economy a worse disaster. But now that worst disaster is happening anyway. The bad dream has turned into a nightmare. Because it's not just the private sector going broke; governments are going broke too.

Not that we have any new information on the subject. And we wait to be proven wrong. But we can add and subtract. And when we add up the debt totals in the developed world - the US, Europe, and Japan - what we get are some pretty big numbers. Government debt alone is $32 trillion. That's for a combined economy of about $34 trillion.

Right now, with the lowest interest rates in 30 years, it's still possible for most 'western' governments to pay the interest and finance their deficits. But Europe has already run into trouble. Every government in Europe is scrambling to come up with a credible plan for budget cuts. David Cameron announced his plan just yesterday.

"Austerity plans multiply in Europe," says the headline in yesterday's Figaro. And those poor French bureaucrats! They're supposed to cut expenses by 10% next year.

In Japan and America, on the other hand, deficit spending still looks easy. Aside from a few cranks, clairvoyants and Daily Reckoning readers, everyone seems to think things will be all right forever. There is no serious pressure to cut budgets - except at the state level. The Pentagon still has a blank check - it just fills in the amount each year. Health care expenses still grow like weeds without winter.

Few people realize that America's finances are already no better than those of Greece. Fewer still care.

But heck, we're not going to go around with a long face about it. Nope. So what if the stock market begins the terminal phase of its long bear market - the one that began ten years ago? So what if the real estate market takes the next stairway down towards more foreclosures and lower prices? So what if the feds go broke?

We're not going to sweat it. Instead, we're going to enjoy it.

But how? Ah... Well, first, we're going to stay out of US stocks in the short run. Then, we're going to get out of US bonds and the US dollar...too. We're going to stay in cash and gold...

And maybe we'll learn to speak Chinese...

And more thoughts...

Deep Do-Do Horizon...

Well, Rand Paul, Ron's son, has already put his foot in his mouth.

He's quoted in the news telling the media to back off and give BP a break. "Everybody makes mistakes..." he says.

Of course, Rand is right. Even huge oil companies err. And anyone who tries to drill a hole in the earth's crust a mile below the surface of the water, is bound to have a few 'uh oh' moments.

The size of the 'uh oh' in this case could be breathtaking. Who knows? On the one hand, the oil company acts like our son, Edward, 16, when he drops a glass or forgets to do his homework. "It's no big deal... Don't get all excited about it..." he says. On the other, there are 'experts' predicting an EE - an 'extinction event.' If enough black goo oozes out of the hole, they say, it could poison all the oceans...and make the planet uninhabitable! The continental US will be a land crowned with brotherhood from slick to shining slick.

We don't know what to think. So we don't think anything at all. Besides, the newspaper tells us that Kevin Costner has invented a new technology for cleaning up the ocean - called "ocean therapy." No kidding.

But the media is on BP's case. And the politicians too. Nobody likes a big oil company. And Rand Paul's comment - according to the press - just proves the man is not fit to sit in the US Congress. The press wants someone who knows how to fake outrage when the moment calls for it.

We don't know Rand Paul; we only know his father. Pere Paul is the kind of politician the country needs but won't accept. He offers real 'change.' That is to say, if he had the power to do so, he would unwind the welfare/warfare state. He would more-or-less, let people alone to get on with their own lives again.

But that is not what Americans want...neither Republicans, Democrats, nor Tea Party members. Nor is it what voters want. What the man on the street seems to want is cheaper gasoline, free health care, food stamps, Social Security, wars and boondoggles. At least, that's what the evidence suggests. He wants protection from everything and a free lunch too.

We don't know about Rand.

But as for Ron...the country doesn't deserve him.

Regards,

Bill Bonner

for The Daily Reckoning Australia

Similar Posts:


2008 Plunge All Over Again or Merely a Quick Correction?

Posted: 26 May 2010 04:31 PM PDT

The recent carnage on the general stock market corresponded to a visible downturn in the mining stocks, which consequently caused many PM Investors to be worried about the future performance of their PM assets. Read More...



The Gold & Silver Precious Metals Correction

Posted: 26 May 2010 04:24 PM PDT


It's been an exciting week for traders as volatility levels are through the roof and the broad market is moving up and down like a yoyo. You cannot take your eyes off the screen if you have a large amount of money invested as you can quickly find yourself with a large profit or loss in the matter of minutes….

Although we have seen stocks jump around the past few days precious metals have held strong with very little volatility. This is because of the economic fears looming for the US and other countries of possible financial collapse. This fear is helping to boost gold and silver prices because they are seen as the safe haven. Also we are seeing money move in the US dollar because the country is still seen as a leader in many ways helping to boost the US dollar.

Below are a couple charts on Gold and Silver ETF's showing the end of last years rally and the correction in prices which are now looking to setting up for another leg higher.

GLD – Gold ETF Trading Vehicle – Daily Chart

I called this chart "The Golden Correction" because it literally is. We saw prices rally late in 2009 finishing off with a parabolic spike which we know is not sustainable and almost always results in a VERY sharp drop. This correction unfolded as planned with an ABC retrace which shakes out weak positions. We then we saw a reverse head & shoulders pattern form which again also shakes out weak positions. Once the neckline was broken from the reverse H & S the new up trend was started providing a couple trading opportunities for us along the way. The most recent low risk entry point can be seen on the chart as gold prices dropped back to a key support level.

Gold Futures Price – 60 Minute Day Trading Chart

Gold has been showing some very bullish price action the past week forming several mini bull flags with confirming volume levels. I think we should see gold pop another $5-10 bucks in the very near future if not continue higher for several days.

SLV – Silver ETF Trading Vehicle – Daily Chart

Silver formed much of the same patterns as gold but with much more volatility. Also silver has yet to break the 2009 high which is surprising but with a large part of silver being use for industrial purposes it does make sense as the economy is not as strong as it was thought to be in 2009. Silver carries much more risk when trading because it has more random moves and increased volatility.

Mid-Week Precious Metals Trading Conclusion:

In short, gold and silver are in an uptrend and looking strong. Both are currently trading at short term resistance levels on the daily chart which has caused them to stop moving up today (Wednesday May 26th) but on an intraday basis they look solid and could break though these resistance levels.

That being said buying way up here adds a lot more risk because a good chunk of the move has already been made and if prices do roll over and start heading back down the next support level is several percentage points away for placing a protective stop with the proper amount of wiggle room.

If trading Gold, Silver and Index Futures and ETFs interested you check out my trading services at www.TheGoldAndOilGuy.com

Chris Vermeulen

Gold Seeker Closing Report: Gold and Silver Gain While Dow Drops Under 10,000

Posted: 26 May 2010 04:00 PM PDT

Gold traded about 0.5% higher in Asia and rose to as high as $1214.75 by about 6AM EST in London before it dropped back to around $1210 in early New York trade, but it then rose to a new session high of $1216.40 by about 11AM EST and ended with a gain of 1.35%. Silver climbed to as high as $18.317 in London before it also pared its gains a bit, but it then rose to a new high of $18.39 by late morning in New York and ended with a gain of 2.7%.


Greece, Portugal and Spain Are the Least of Our Economic/Financial Challenges

Posted: 26 May 2010 03:55 PM PDT

After hitting a cycle high of 1217.28 on April 23, 2010, the S&P 500 stock market index fell by 10.65% in the following 20 trading days. The media would have you believe that the ongoing "official" correction in the U.S. equities market ... Read More...



Greek Scramble For Physical Brings Gold Price To $1,700 Per Ounce

Posted: 26 May 2010 03:53 PM PDT

And there are those who wonder how Sprott's PHYS could have traded at "ludicrous" NAV premium of over 20%. Coinupdate.com reports that prices at which the Greek Central Bank is selling one ounce gold equivalents are as high as $1,700 (40% over spot), and prices on the black markets are even higher. The punchline, as Athens slowly returns to a forced gold standard: " A popular spot for street vendors to sell their coins is near the Athens Stock Exchange. There the traders wait for citizens to bring payments received from unloading their paper assets like stocks and bonds." That's good - downtown Manhattan close to the NYSE has some free space for gold vendors to set up shop as well, they just need to push some of the frontrunning/collocation boxes off to the side. And in other rhetorical ruminations, is it safe to say that the last days of the fiat experiment are among us now that people themselves are bypassing the government and enforcing their own gold standard?

More from Coin Update:

The fear running through the Greek populace is that the nation's government may default on some of its debts.

Since 1965, the Greek government has imposed restrictions on trading British Sovereign gold coins (gold content .2354 oz). Despite those restrictions, the Bank of Greece reports that it is selling an average of more than 700 coins per day to worried Greeks.

In the first four months of 2010, the Greek central bank sold more than 50,000 sovereigns at its main downtown Athens office. Bank officials estimate that at least 100,000 other coins changed hands on the black market. The Bank of Greece has received as much as $409 per coin, which works out to a price of more than $1,700 per ounce of gold! Prices paid on the black market are reckoned to be even higher. A popular spot for street vendors to sell their coins is near the Athens Stock Exchange. There the traders wait for citizens to bring payments received from unloading their paper assets like stocks and bonds.

The US government and some state governments such as California are in financial straits as bad as or even worse than Greece. How long will it take before American buyers will have to wait in lines to pay outrageous premiums for what are now bullion-priced gold and silver coins? More than one analyst thinks those days will come within a few months or sooner.

The article then goes on to discuss the well-known gold price supression schemes developed over the past 30 years by JPM, Goldman and the LBMA, which should by now not be news to any readers.

What should, is that if one could found a way to legally transfer 10 or so ounces to Athens, anyone could make $5 grand on the spot. With some patience the same return will be achievable in our very own US of A.

http://www.zerohedge.com/article/gre...ice-1700-ounce

---------------------------------------------

The dreaded underground economy and scramble to tangible assets-here soon.

Litigation Killing What Derivatives Aren't

Posted: 26 May 2010 03:50 PM PDT

Dear CIGAs,

Whatever OTC derivatives do not do to the investment banks, litigation will. Litigation is both civil and criminal. No civil suit based on derivatives can ever go to judgement by jury because it will be a stone cold loser. Even a bench trial would present significant risk to the defendant.

OTC derivatives are the basic problem about which nothing has been done and nothing will be done. That secures the final end which is gold as the only standard, measure and storehouse of value functioning as a medium exchange. By definition that is what money is.

Gold is the only money that can be trusted as debt is being added to debt in a ridiculous plan to cure a problem.

The fiat system is cooked, and there is simply no good paper currency.

The face of this world is about to change. Sir Richard Russell is correct.

Please protect yourselves because you must. I can point you in the right direction. It is you must take action.

Lehman Sues JPMorgan to Recover Billions of Dollars (Update1)
By Linda Sandler and David McLaughlin

May 26 (Bloomberg) — Lehman Brothers Holdings Inc. sued JPMorgan Chase & Co. to recover tens of billions of dollars in "lost value," accusing the bank of precipitating its downfall and preventing it from winding down in an orderly fashion.

JPMorgan, which was Lehman's main short-term lender before its September 2008 bankruptcy, helped cause the failure by demanding more collateral as credit markets tightened during the financial crisis, Lehman said in a complaint filed today in U.S. Bankruptcy Court in New York.

The lawsuit follows a report by Lehman examiner Anton Valukas, who said in March that Lehman might have grounds for suing JPMorgan and other banks.

"On the brink of LBHI's bankruptcy, JPMorgan leveraged its life and death power as the brokerage firm's primary clearing bank to force LBHI into a series of one-sided agreements and to siphon billions of dollars in critically needed assets," Lehman said in the complaint.

Lehman didn't specify in the complaint an amount for the losses it is claiming as a result of JPMorgan's actions.

"The lawsuit is ill conceived and the costly litigation will cause a further drain on the limited resources available to the Lehman bankruptcy estate," Joe Evangelisti, a JPMorgan spokesman said.

More…

Gold Daily Chart: Cup and Handle Formation on Track

Posted: 26 May 2010 03:31 PM PDT


This posting includes an audio/video/photo media file: Download Now

When the Top Caves In

Posted: 26 May 2010 03:02 PM PDT

* The Solari Gold Star signifies a "must read" article. By Sam Smith What corporate America wanted was nothing less than the Third Worlding of the US, a collapse of both present reality and future expectations. The closer the life and wages of our citizens could come to those of less developed nations, the happier the huge [...]


US Debt Clock - active

Posted: 26 May 2010 02:26 PM PDT

I can't get it to post here, but it's really cool

http://www.usdebtclock.org/

What the Real Public Interest Is

Posted: 26 May 2010 02:15 PM PDT

After a flurry of arguments and debating in the last few days, we're turning today's Daily Reckoning over to a few learned readers. No, we haven't run out of ideas or salient, socialist-destroying arguments to make. But there are deadlines to make in the publication of our trio of investment newsletters. We'll be back tomorrow on the great super triple lindy back flip dive.

In response to yesterday's letter, Argument from Authority:

Morning guys. As you can see, I am reading your latest at 1.53 am , this is one of the most brilliant essays on the complete ignorant upstuff of the rudderless socialist government ever. Well done. About 25 years ago my doctor, a Hong Kong born Chinese true Aussie told me. "You whities will become the poor white trash of Asia." WERE DOOMED!! DOOMED!!

Hmmn. Maybe not try to read the DR after mid-night?

More yesterday's piece:

Dear Dan,

I am sorry, but I can't let your recent Daily Reckoning commentary pass without some reply. Your attempted rebuttal of the letter concerning the Resource Super Profits tax was weak and misleading. After saying you'd attack the argument on its merits and then proceeding to regurgitate your ravings against economists in general for a couple of tedious pages. While amusing the first few times and no doubt justified, they tend to get monotonous and repetitious and did nothing for your argument here. I have no idea which school of thought the economists who wrote the letter are from and, frankly, don't care, as it is their claims which are under question not their personal beliefs. I am no fan of current economic thinking and am a forester not an economist. Thus, perhaps you will be happier to listen to my interpretation of the tax and its implications.

When you finally did get back to the subject, your arguments are weakened by selectively quotations and misguided logic. You appear to be suggesting that miners should pay nothing to the public for the use of non-renewable resources. You also suggest that if miners were to pay for the use of these resources then everyone should pay because, apart from a few industries such as agriculture and forestry, we are all basically using up non-renewable resources derived from somewhere or another.

The first point would result in us effectively having no rights over our countries own resources. The miner could simply take the resource sell it and only be liable for normal company tax (that it wasn't able to avoid paying through other means). While some might benefit from increased employment etc. while the resource is being extracted, once it is gone there would be nothing. In this way miners are different from other industries which may be able to access non-renewable resources from other geographic locations without having to physically relocate to another region or country. Thus, mines tend to be more disruptive socially, than other industries unless there is some way of investing some of the profits for future benefit of the population. This is exactly what some Scandinavian countries and now oil rich countries are doing with oil revenues – investing them into renewable resources and technologies which will maintain employment and wealth long after the oil has gone.

The second point – that it is unfair to single out miners is perfectly true. Furthermore, such a tax would ensure that all industries depending on non-renewable resources sourced from Australia or other countries with a similar system would have to pay their fair share for the use. This is because the miners will simply pass whatever portion of the tax the market can bare to downstream users of those resources. The key difference between miners and other industries is that, for many, the largest cost is not the raw materials used but a perfectly renewable resource – labour.

Finally, you completely miss (or ignore) the point that this tax will actually benefit miners during downturns in the economy because it is a tax on profits from selling resources not the resources themselves. Currently miners are taxed for digging up resources regardless of whether they are making a profit or not. In this way, the tax payer will be assisting miners during downturns when they might otherwise close down and will benefit from them during upturns thus helping cool a potentially overheating economy. This is what the writers mean by a "more efficient tax" not that it is easier for the Government to collect.

So I think the tax is generally a worthy idea. It is certainly worth a more thorough rebuttal than your half baked attempt. The more important argument is "How can we stop the Government by wasting any profits on mindless schemes such as first home buyer grants, baby bonuses, subsidies for inefficient industries and new freeways".

Cheers,

Barrie

And finally, in response to our claim last week that there is no such thing as "the public interest":

Dear Dan,

What has rattled your cage? I think you are being a bit fundamentalist today. No public interest?? Try telling that to BHP, Rio , the Banks, and property owners. The public interest is the law, the people who maintain it, the system of law enforcement, property rights, the parliament, free speech, infrastructure, hospitals – in short, the Commonwealth. And as its name implies, it does not exist in a vacuum but takes vast amounts of money to run and maintain. The market system does not provide the stewardship of private property. People do with the backing of property rights and the law.

While there may be some truth in your assertions about the use of the term "the public interest" by lawyers, litigants and policy makers, more often than not it is the large corporations who use the lawyers to run roughshod over any that get in their way.

By your way of thinking there was no public interest involved when BHP and the PNG government poisoned a whole river system with the OK Tedi mine. BHP then secured a cheap get out of jail card from an impoverished government and walked away. Certainly, in some people's eyes there is no public interest. Your use of the Tragedy of the commons argument is exceptionally glib and misleading.

You say that "The general welfare is best promoted by people being free to pursue their own interests under the equal protection of a transparently made and enforce law." Trouble is corporations may be run by very powerful people using other people's money but that is in no way the same thing as an individual going into the Pilbara with a pick-axe and a wheelbarrow. You equate people with corporations and while corporations may be treated in law as people, in reality they are very different beasts, does a corporation have a conscience for example?

I may be getting a bit off the track here but your American gung ho attitude has its merits but there are other ways of going about things too. It would be hard to argue in light of the events of the last 3 years that the American way has been a shining light to the rest of us. You like taking a swing at Aussies. I do too. I am a Pom. However, having lived here for 35 years (my entire adult life) I respect the Aussie way. It does not pay to be gung ho here. It is a very unforgiving continent. Drought and bushfire define this nation. The first colony barely survived although the aborigines had done the hard yards for 50,000 years but had hardly achieved anything along the lines that had been achieved in the golden crescent of the Middle East over 6000 years ago. No disrespect to my aboriginal friends – this is one tough country and I take my hat off to them. Self interest takes on a slightly different reality under such circumstances.

Provoking thought is one thing, Dan, but insulting people's intelligence is not helpful.

Yours sincerely,

Nick M.

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Does this look like a top?

Posted: 26 May 2010 02:12 PM PDT

:beerglass::beerglass::beerglass:
Attached Images


Brett Arends: Why I don't trust gold

Posted: 26 May 2010 01:32 PM PDT

9:35p ET Wednesday, May 26, 2010

Dear Friend of GATA and Gold:

Appended here is today's GATA failure -- the failure to reach Brett Arends of The Wall Street Journal, who, despite all GATA's clamoring about unbacked paper gold, the vast inflation of the world's imaginary gold supply -- can still write, in an essay headlined "Why I Don't Trust Gold," about supply exceeding demand and can repeat the cliche about gold being dug out of one hole only to be buried in another, as if for many decades gold was not a real, circulating, transactional currency and as if it is not being restored as such today by computerized and Internet-connected vaulting operations like GoldMoney. With Arends' logic one could sneer just as well at ordinary government currencies -- that they get typed into one central bank or commercial bank computer system only to be buried in the computer system of another central bank or commercial bank.

Oh, well. If you run into Arends, urge him to press the International Monetary Fund for the exact location of the supposed gold it is always threatening or claiming to sell, or to press the Federal Reserve for access to its gold swap agreements with foreign banks and for an explanation of the purposes of those swaps. Then maybe he'll be in a position to write another essay, which he might title "Why I Don't Trust Central Banks."

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Why I Don't Trust Gold

By Brett Arends
The Wall Street Journal
Thursday, May 27, 2010

http://online.wsj.com/article/SB1000142405274870403270457526846247768976...

This is a very sad day for me.

In Part I of this series, when I argued that gold might be about to go vertical, I made a whole bunch of new friends among the gold bugs.

And now I'm going to lose them all.

That's because even though I think gold might be about to take off, I don't recommend you rush out and put all your money into gold bars or exchange-traded funds that hold bullion.

And this is for one simple reason: At some levels, gold, as an investment, is absolutely ridiculous.

... Dispatch continues below ...


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Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource

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Warren Buffett put it well. "Gold gets dug out of the ground in Africa, or someplace," he said. "Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

And that's not the half of it.

Gold is volatile. It's hard to value. It generates no income.

Yes, it's a "hard asset," but so are lots of other things -- like land, bags of rice, even bottled water.

It's a currency "substitute" but it's useless. In prison, at least, they use cigarettes: If all else fails, they can smoke them. Imagine a bunch of health nuts in a nonsmoking "facility" still trying to settle their debts with cigarettes. That's gold. It doesn't make sense.

As for being a "store of value," anyone who bought gold in the late 1970s and held on lost nearly all their purchasing power over the next 20 years.

I get worried when I see people plunging heavily into gold at $1,200 an ounce. What if the price goes back to where it was just a few years ago, at $500 or $600 an ounce? Will you buy more? Sell?

My concerns about gold go even further than that.

Let's step inside the gold market for a moment.

Everyone knows the price has risen about fivefold in the past decade. But this is not due to some mystical truth or magical act of levitation. It is simply because there have been more buyers than sellers.

Banal, but true -- and sometimes worth repeating.

If the price rises you'd think there must be a shortage. But data provided by the World Gold Council, an industry body, tell a remarkable story.

Over that period the world has produced -- or, more accurately, recovered -- far more gold than anyone actually wanted to use. Since 2002, for example, total demand for gold from goldsmiths and jewelers, and dentists, and general industry, has come to about 22,500 tonnes.

But during the same period, more than 29,000 tonnes has come on to the market.

The surplus alone is enough to produce about 220 million 1-ounce gold American Buffalo coins. That's in eight years.

Most of the new supply has come from mine production. Some, though a dwindling amount, has come from central banks. And a growing amount has come from recycling -- old jewelry and the like being melted down for scrap. (This is a perennial issue with gold. I never understand why the fans think gold's incredible durability -- it doesn't waste or corrode -- is bullish for the market. It's bearish.) So if supply has consistently exceeded user demand, how come the price of gold has still been rising?

In a word, hoarding.

Gold investors, or hoarders, have made up all the difference. They are the only reason total "demand" has exceeded supply.

Lots of people have been buying gold in the hope it would rise. But the only way it can rise is if still more people buy it, hoping it will rise still further. And so on.

What do we call an investment scheme where current members' returns depend entirely on new money brought in by new members?

A Ponzi scheme.

Yes, as I wrote earlier, gold may well be the next big bubble. And that may mean there is big money to be made in speculation.

But I don't trust it as an investment.

How can you square this golden circle? I'll tell you in Part III.


* * *

Join GATA here:

World Resource Investment Conference
Sunday and Monday, June 6 and 7, 2010
Vancouver Convention Centre
Vancouver, British Columbia, Canada
http://www.cambridgehouse.ca/index.php/world-resource-investment-confere...

* * *

Support GATA by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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:

http://www.goldrush21.com/

* * *

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:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


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Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot:
The Anglo Far-East Bullion Co.'s Gold and Silver Conference

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/

Brett Arends: Why I don't trust gold

Posted: 26 May 2010 01:32 PM PDT

9:35p ET Wednesday, May 26, 2010

Dear Friend of GATA and Gold:

Appended here is today's GATA failure -- the failure to reach Brett Arends of The Wall Street Journal, who, despite all GATA's clamoring about unbacked paper gold, the vast inflation of the world's imaginary gold supply -- can still write, in an essay headlined "Why I Don't Trust Gold," about supply exceeding demand and can repeat the cliche about gold being dug out of one hole only to be buried in another, as if for many decades gold was not a real, circulating, transactional currency and as if it is not being restored as such today by computerized and Internet-connected vaulting operations like GoldMoney. With Arends' logic one could sneer just as well at ordinary government currencies -- that they get typed into one central bank or commercial bank computer system only to be buried in the computer system of another central bank or commercial bank.

Oh, well. If you run into Arends, urge him to press the International Monetary Fund for the exact location of the supposed gold it is always threatening or claiming to sell, or to press the Federal Reserve for access to its gold swap agreements with foreign banks and for an explanation of the purposes of those swaps. Then maybe he'll be in a position to write another essay, which he might title "Why I Don't Trust Central Banks."

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Why I Don't Trust Gold

By Brett Arends
The Wall Street Journal
Thursday, May 27, 2010

http://online.wsj.com/article/SB1000142405274870403270457526846247768976...

This is a very sad day for me.

In Part I of this series, when I argued that gold might be about to go vertical, I made a whole bunch of new friends among the gold bugs.

And now I'm going to lose them all.

That's because even though I think gold might be about to take off, I don't recommend you rush out and put all your money into gold bars or exchange-traded funds that hold bullion.

And this is for one simple reason: At some levels, gold, as an investment, is absolutely ridiculous.

... Dispatch continues below ...


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Warren Buffett put it well. "Gold gets dug out of the ground in Africa, or someplace," he said. "Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

And that's not the half of it.

Gold is volatile. It's hard to value. It generates no income.

Yes, it's a "hard asset," but so are lots of other things -- like land, bags of rice, even bottled water.

It's a currency "substitute" but it's useless. In prison, at least, they use cigarettes: If all else fails, they can smoke them. Imagine a bunch of health nuts in a nonsmoking "facility" still trying to settle their debts with cigarettes. That's gold. It doesn't make sense.

As for being a "store of value," anyone who bought gold in the late 1970s and held on lost nearly all their purchasing power over the next 20 years.

I get worried when I see people plunging heavily into gold at $1,200 an ounce. What if the price goes back to where it was just a few years ago, at $500 or $600 an ounce? Will you buy more? Sell?

My concerns about gold go even further than that.

Let's step inside the gold market for a moment.

Everyone knows the price has risen about fivefold in the past decade. But this is not due to some mystical truth or magical act of levitation. It is simply because there have been more buyers than sellers.

Banal, but true -- and sometimes worth repeating.

If the price rises you'd think there must be a shortage. But data provided by the World Gold Council, an industry body, tell a remarkable story.

Over that period the world has produced -- or, more accurately, recovered -- far more gold than anyone actually wanted to use. Since 2002, for example, total demand for gold from goldsmiths and jewelers, and dentists, and general industry, has come to about 22,500 tonnes.

But during the same period, more than 29,000 tonnes has come on to the market.

The surplus alone is enough to produce about 220 million 1-ounce gold American Buffalo coins. That's in eight years.

Most of the new supply has come from mine production. Some, though a dwindling amount, has come from central banks. And a growing amount has come from recycling -- old jewelry and the like being melted down for scrap. (This is a perennial issue with gold. I never understand why the fans think gold's incredible durability -- it doesn't waste or corrode -- is bullish for the market. It's bearish.) So if supply has consistently exceeded user demand, how come the price of gold has still been rising?

In a word, hoarding.

Gold investors, or hoarders, have made up all the difference. They are the only reason total "demand" has exceeded supply.

Lots of people have been buying gold in the hope it would rise. But the only way it can rise is if still more people buy it, hoping it will rise still further. And so on.

What do we call an investment scheme where current members' returns depend entirely on new money brought in by new members?

A Ponzi scheme.

Yes, as I wrote earlier, gold may well be the next big bubble. And that may mean there is big money to be made in speculation.

But I don't trust it as an investment.

How can you square this golden circle? I'll tell you in Part III.


* * *

Join GATA here:

World Resource Investment Conference
Sunday and Monday, June 6 and 7, 2010
Vancouver Convention Centre
Vancouver, British Columbia, Canada
http://www.cambridgehouse.ca/index.php/world-resource-investment-confere...

* * *

Support GATA by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

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:

http://www.goldrush21.com/

* * *

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:

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To contribute to GATA, please visit:

http://www.gata.org/node/16


ADVERTISEMENT

Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot:
The Anglo Far-East Bullion Co.'s Gold and Silver Conference

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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