Gold World News Flash |
- Recovery: Uncertainty Reigns Supreme
- Hendry: 'I Would Recommend You Panic'
- Stop-Start Idle Elimination Technology: 5 Companies With First Mover Advantage
- Deflation and Inflation Are Alive and Well
- Got Gold Report - COT Flash May 28
- Jim?s Mailbox
- Detroit to Bulldoze Thousands of Homes in Fight for Survival
- WSJ Does Not Understand How the Gold Price is Formed
- Sirius Investors Anticipating Russell Index Reconstitution
- Is the U.S. Government Planning War?
- Carmel Daniele: Gold Will Rise and Sky Wont Fall
- David Einhorn's 'Good News for the Grandchildren'
- Implications On GoM And Global Drilling Following The Biggest Oil Spill In History; Presenting The Short Candidates: DO, PDE And NE
- Just Remember… They’ve been telling your Gold is a barbaric relic for decades now !
- On The 2% Target Inflation Rate
- This past week in gold By Jack Chan
- John Taylor On The Dollar, Growth And Immigration
- When Your City Goes Bankrupt..
- Jim's Mailbox
- Gold Denigration Persists
- A Primer: Sovereign Debt Defaults = Social Unrest + Much Higher Gold Prices
- Funds seek Midas touch with miners
- The ECB Blasts Governmental Fear-Based Racketeering, Questions Keynesianism, Believes The Fed's Powers Are Overestimated
- Oil Drilling Liability Cap Led To The Gulf Spill
- Canada 1/4 Ounce Maple with Odd Stamping
- International Forecaster May 2010 (#9) – Gold, Silver, Economy + More
- Precious Metal Protection from Frightening New Creatures
- Currencies and Metals Rally
- Coin (Friday and) Monday: World Cup Commemoration
- Lord of the ‘Flation
- Silver Prices Retreat in May 2010 Despite Rallying Final Week
- Bullion & Business May 2010 Recap
- PCGS Coin Sniffer™ Helps Detect Coin Doctoring, Hobby Protection Steps
- 2010 American Buffalo Gold Proof Coin Launch Date Officially Announced
- IAU Thanks Mint for Canadian International Year of Astronomy Coin
- Taibbi’s View of Congress’ Audit the Fed Debate
- Dow, gold will converge but not by decimating Dow, Lassonde says
- British investors scramble for gold coins to beat tax increase
- Federal Government Wont Enforce Bank Laws
- Blowing Bubbles
| Recovery: Uncertainty Reigns Supreme Posted: 29 May 2010 07:44 PM PDT John Browne submits: Just a few weeks ago, most financial analysts continued to insist that the road to recovery stretched far into the future. Now, uncertainty has returned with a vengeance and the stock market has booked its first official 10% correction since this tenuous 'bull' market began in the spring of 2009. In recent days, markets have shown signs of life - but nascent rallies have been quickly smothered. I believe there are five fundamental reasons for this persistent uncertainty. Complete Story »
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| Hendry: 'I Would Recommend You Panic' Posted: 29 May 2010 07:43 PM PDT  Tim Iacono submits: In this widely watched BBC video, Hugh Hendry of hedge fund Eclectica Management recommends the world panic over the ongoing European debt crisis and then the group debates whether perpetual bailouts and a much longer slowdown are preferable to a real purging of the system and a much shorter recession that would also see major reforms. Complete Story »
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| Stop-Start Idle Elimination Technology: 5 Companies With First Mover Advantage Posted: 29 May 2010 07:11 PM PDT John Petersen submits: I've written several articles over the last year that explain why idle elimination is a crucial first step in the global effort to increase fuel efficiency and curb CO2 emissions. For my new readers, or those who are confused by a torrent of news stories and analysts reports that wax poetic on the expected benefits, costs and challenges of gee-whiz vehicles that are "coming soon to a showroom near you," altenergymag.com describes stop-start systems, or micro-hybrids, as follows: These are conventional vehicles powered either by gasoline or diesel engines in which the 12-volt starter motor has been eliminated and a specially designed, belt-driven integrated starter/generator, or ISG, has been installed in place of the conventional alternator. While the ISG of a micro hybrid cannot help to propel the vehicle, it can provide two important hybrid features. First of all, a micro hybrid will feature idle stop. Engine control circuitry is included in a micro hybrid which will shut down the internal combustion engine when the vehicle is at rest. This feature alone can improve fuel economy by 10% to 15% in city/urban driving environments. The electronic control system in a micro hybrid can also control the charge cycle of the alternator so that it produces electricity to recharge the vehicle battery primarily during deceleration and braking. This provides a mild amount of regenerative braking and an additional gain in efficiency. Complete Story »
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| Deflation and Inflation Are Alive and Well Posted: 29 May 2010 07:02 PM PDT Calafia Beach Pundit submits:  Over the past 16 years the U.S. has experienced a unique condition: the persistence of both inflation and deflation at the same time in two major sectors of the economy. This chart compares the behavior of two of three major subcomponents of the Personal Consumption Deflator: one covers the price of services, which in turn is largely driven by the inflation component of labor costs (and here I note that the PCE deflator rose 40% over the period covered by this chart), and the other covers the price of durable goods (e.g., cars, computers, appliances, TVs, equipment). (The third subcomponent is nondurable goods.) Never before, since the data were first collected in 1959, have these two price indices moved in opposite directions. Complete Story »
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| Got Gold Report - COT Flash May 28 Posted: 29 May 2010 06:59 PM PDT Bottom line: COT report reveals COMEX commercial traders cover shorts modestly for gold, COMEX swap dealers cash in the shorts they capped the silver market with last week. Indicators more bullish than bearish, but acting strangely. Gold -1.7% and the gold LCNS -4.1%. Silver -5.7% and the silver LCNS plunges -13.1%. Details just below. HOUSTON – We remain nervously on the sidelines with our short-term gold-silver ammunition, but, as always, we remain thankful we hold physical metal in our longer-term arsenal. The activity shown in this week’s peek into the positioning of the largest traders of gold and silver futures didn’t cause us to take a last minute long position in late Friday trading, but we certainly considered doing so in the afterhours session. However, with a Fitch downgrade of Spain (to Aa+ from Aaa) already in the news, the U.S. President down in Louisiana grand standing in the Louisiana heat, and early looks at some ...
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| Posted: 29 May 2010 06:59 PM PDT View the original post at jsmineset.com... May 29, 2010 03:24 PM Greetings Jim, The Gold Currency Index continues to hold near all-time highs and probabilities still favor a period of consolidation following the recent surge from late March. Technical indicators are slightly bullish overall on the daily chart, so for now the uptrend remains in control. Looking ahead, if the short-term correction from earlier this month develops into a pennant or ascending triangle formation, another long-term breakout would become likely. However, if the index breaks below uptrend support near 30.40, a longer period of consolidation would be forecast. It is also worth noting that the positive divergence between the GCI and gold in US dollar terms remains in place. Best, CIGA Erik Prometheus Market Insight [URL]http://www.prometheusmi.com[/URL] CIGA Fran says "Small enough to fail." 3 Fla. banks, 1 each in Nev., Calif. shut down Regulators shut down 3 banks ...
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| Detroit to Bulldoze Thousands of Homes in Fight for Survival Posted: 29 May 2010 06:59 PM PDT Like Thursday's price action... I wouldn't read much into Friday's trading action either. There was extremely thin volume in all metals. Gold sold off about 1% once the Comex opened... but gained it all back in what I think was a short covering rally that started shortly after 11:00 a.m. in New York. Gold actually finished up a couple of bucks on the day. Both gold's high and low price came in New York trading. The lows was $1,201.40 spot... and the high was $1,216.10 spot. Silver's high price of the day occurred about an hour after trading began in London yesterday... with the high around $12.65 spot. It was mostly down hill from there... with a mini sell-off at the Comex open. The low price of the day [$18.22 spot] was in New York trading... and the price spent a couple of hours bouncing off that low before recovering a bit [in sympathy with gold] into the close. Gold and the dollar were pretty much un-correlated again yesterday. If this trend contin...
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| WSJ Does Not Understand How the Gold Price is Formed Posted: 29 May 2010 06:43 PM PDT
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| Sirius Investors Anticipating Russell Index Reconstitution Posted: 29 May 2010 06:11 PM PDT Satellite Radio Playground submits: By Dennis “Cos” Costa Sirius XM Radio (NASDAQ:SIRI) regained compliance for inclusion in the 2010 annual Russell Index Reconstitution process after being removed from the Russell 3000 back in June 2009. The objective qualifying criteria, which the company failed to meet last year, was the minimum closing price rule of $1.00 on the last trading day of May. Friday May 28, 2010 was the markets snap-shot day for closing price inclusion in the Russell’s reconstitution methodology. With Sirius XM’s stock price closing above a $1.00 at $1.03, the company has now regained inclusion in the next step of the Russell’s ranking process. Complete Story »
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| Is the U.S. Government Planning War? Posted: 29 May 2010 05:28 PM PDT (snippet) Headlines:
Our economy, as is the case for much of the rest of the world's economies, is currently imploding. Since all major economies in the world are based on valueless, un-backed, and worthless money, this situation should have been evident to the mainstream long ago. Of course the failing economy is just one piece of the puzzle, but it is most definitely the most important piece. With a so-called vibrant economy over the past decade or so, even though it was based on lies and deceit, and was a complete sham, the general population was easy to control during these so-called "prosperous" times. With the real economy now being exposed for the fraud that it is, and the real risks becoming more evident, the once complacent citizen is now becoming angry. Because of this, the evil U.S. federal government must find a new method of fooling the masses into believing in "their" government and country. War is the obvious answer, as war solidifies the putrid and false nationalistic worship of the peasants more than any other ploy. In my opinion, any bad economic news, any exposure of the current economic fraud, any sovereign government risk of collapse, any higher unemployment or excessive price inflation, will anger the majority and vastly escalate the government's need to start another war. It cannot afford to let the situation get out of hand, as there are many more of us than there are of them, so whatever becomes necessary in the mind of government in order for it to effect its manipulation and control over the people will be implemented. If that is a purposely orchestrated and unnecessary war, then so be it. The openness of these plans and the blatant steps being taken by the federal government to protect its power are disturbing to say the least. Even with this openness however, most are still in the dark. Since 2001, our civil rights have been for the most part destroyed. Laws have been enacted that allow the government to capture and hold indefinitely any citizen it deems a risk, and without the possibility of charge or trial. Legislation to open and construct holding camps [see here] has been proposed and plans to implement this process are being prepared for today.Martial Law is now not just a possibility but a probability. This government in my opinion is at the same time preparing for both Martial Law and war to quell the tide of possible civil unrest due to economic instability or collapse. This is astounding, as both ends of the spectrum are being covered by Leviathan's planned course of action. This should frighten all of us! More Here.. 
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| Carmel Daniele: Gold Will Rise and Sky Wont Fall Posted: 29 May 2010 05:01 PM PDT
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| David Einhorn's 'Good News for the Grandchildren' Posted: 29 May 2010 04:35 PM PDT Market Folly submits: Earlier, we posted a compilation of notes from the Ira Sohn Conference and we also detailed Steve Eisman's presentation, Subprime Goes to College. Next, we're detailing the speech from Greenlight Capital's David Einhorn. The hedge fund manager's speech entitled, "Good News for the Grandchildren" focuses on how our grandchildren won't have to pay for the consequences of our actions; we will. He thinks a crisis has already unfolded and that our generation will be the ones paying for it. Instead of watching the situation spiral into a debt crisis, Einhorn urges us to address the situation right now. As you can imagine, Einhorn likes gold and gold stocks. In particular, he mentioned African Barrick Gold (ABG) traded in London. Complete Story »
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| Posted: 29 May 2010 02:57 PM PDT
With concerns about implications on GoM drilling post the Macondo spill dominating the investing world, as every day millions of gallons of fresh oil spill into the Gulf of Mexico, we present reports by Bank of America and JPM which disclose possible consequences from regulatory intervention, as well as all the rigs and operators in the GoM likely to be impaired by either surging insurance premiums, or something much worse, now that US offshore drilling policy is in greater flux than even ongoing financial reform. With today's adverse BP developments, Tuesday will likely see another bloodbath within the offshore drilling space, where RIG CDS have blown out more than in 2007 when the company was rumored to be a take private candidate more often than Radioshack is today (speaking of, in breaking news, today the market did not leak a new rumor about some idiot LBOing RSH ). The attached reports should provide a sufficient perspective on which managers and which operators are most likely to suffer the wrath of a skittish market. BofA report:
JPM report:
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| Just Remember… They’ve been telling your Gold is a barbaric relic for decades now ! Posted: 29 May 2010 02:45 PM PDT
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| On The 2% Target Inflation Rate Posted: 29 May 2010 02:26 PM PDT
Over the past week, numerous people have inquired about the utility and practicality of the 2% "target" inflation rate held sacred to central banks the world over. Why 2%? And, more importantly, why not more... much more. Will the Fed ever get to targeting hyperinflation as a monetary policy goal, and if we ever get to that ludicrous position, can this be implemented in practice? Are the days of 2% target rates over? This is not just some theoretical whimsical musing - these questions are predicated by a recent IMF report which hypothesized that a 4% inflation rate "might prove superior to the traditional 2% target rate in helping to minimize the impact of future economic shocks." Furthermore, the higher the target rate, the greater the stimulus flexibility, as ZIRP would then become a perpetual component of capital markets, and recurring fiscal stimuli would be the norm as opposed to the outlier. We present a TD Securities report by Eric Lascelles which answers all questions about "why 2%", and what will happen when 2 becomes 4, then 8, then 16, etc, until the second coming of Rudolf von Havenstein is finally confirmed.
This posting includes an audio/video/photo media file: Download Now | ||||
| This past week in gold By Jack Chan Posted: 29 May 2010 01:34 PM PDT
GLD – on sell signal. SLV – neutral. GDX – on sell signal. XGD.TO – on sell signal. 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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| John Taylor On The Dollar, Growth And Immigration Posted: 29 May 2010 12:53 PM PDT
The Dollar, Growth, and Immigration Although those of us who invest in the currency market have to pay careful attention to the daily price twitches resulting from economic releases and political speeches, the foreign exchange value of individual currencies actually moves glacially with wide emotional swings around the central value. The emotion has often run against the dollar. Before the start of the euro, the Deutsche mark was the market favorite. Two societal attributes probably contributed to this consistent bias. First, the Bundesbank and the German government preached and usually followed a more conservative monetary and fiscal strategy than the Fed and the US government did, which resulted in marginally tighter liquidity on average in Germany. The two governments’ different leanings could partly be explained by the historical accident of the ruinous hyperinflation that Germany suffered in 1923, terrifying modern Germans, but more critical was the fact that the US population was younger and growing faster than the German one. Because the tendency to consume is higher in the early years of adulthood and trails off dramatically as retirement age approaches, Americans bought more and saved less than the Germans. Furthermore, the US had to spend more on its infrastructure and social services than Germany, just to handle the higher level of household formation. Looking over the past 40 years, it seems that countries with growing populations and with faster growing economies tend to have weaker currencies than those with a more stable population and slower growing economies. We think this is about to change. Stability is now passé and the optimal currency of the future will have high relative growth in output and in population. Demographics are the key to the future median value of currencies, and the winners will include countries like Brazil, Australia, Canada, and the United States as GDP = population growth plus productivity. Among the losers will be Japan and the Eurozone countries. The fast growing countries with birthrates above the levels necessary for replacement combined with societies open enough to allow immigrants to assimilate with the native population will be the big winners. The population of the US should rise by about 33% over the next forty years, and those young workers, both native-born children and new arrivals, will help pay the retirement costs of the aging ones. In Japan and Western Europe, where the birthrate is way below the replacement rate and immigration is either severely restricted or not well assimilated into the society, the burden of the aged rises so dramatically that their social structures might collapse under the strain. In only 10 years, the dependency ratio in Japan will probably rise to the point where every two workers will have to support one retiree. Although the number of retirees is rapidly growing, Japan’s working age population is shrinking. Unless Japan allows dramatically increased immigration, this picture will continue as the incoming class of schoolchildren should be the smallest since shortly after the end of World War II. The European numbers are not as bad as the Japanese, but the dependency ratios still rise to dramatic levels, where fewer than 3 workers must support each retiree. Making the European situation worse is its highly centralized labor structure. The pressure groups and unions in stable and socially unified societies have, over time, reached favorable distributional bargains that make the retirement support structure even more debilitating. The Greek example is in the press every day. Deals like ‘full retirement for hairdressers at the age of 47 because of the risk they suffer from exposure to harmful chemicals’ can only develop in a society with a stable population that is not growing rapidly. The US with few unions, new immigrants, and social mobility is less likely to have cozy retirement schemes. Emerging countries that can manage the growth formula, like Brazil or Singapore, should have the flexible society allowing them to outperform the G-10 leaders: the US, Canada, and Australia. h/t Teddy KGB
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| When Your City Goes Bankrupt.. Posted: 29 May 2010 12:19 PM PDT Reporting from Vallejo, Calif. First came the break-in at the combination electronics repair shop and real estate agency. Then came the burglar bars on the store's plate-glass window.But Jimmy Mozaffar, owner of Data Days, sounds less angry with the criminals than he does with the crime-stoppers here in hard-knock Vallejo, the largest city in California history to file for bankruptcy. The thieves made off with laptops, but it was the pared-down Police Department — which has lost a third of its officers — that stole Mozaffar's peace of mind. When Mozaffar called the department to report the burglary last fall, a recording directed him to a website. "Nobody came out," he said. "They said they'd deal with it." Since filing for Chapter 9 bankruptcy protection two years ago, this scrappy Bay Area bedroom community has come to symbolize the fiscal troubles — now faced by many cities — that helped push it to the brink: unrestrained spending, out-of-control pension costs and a burst housing bubble. "I don't think other cities look at us with a jaundiced eye because we've filed bankruptcy," said Mayor Osby Davis. "Other cities … look at us and say, 'Wow, we're a step away from where you are. We just want to know, how are you getting through this?' " The answer, so far, is not so well, although "the hardships visited on Vallejo residents are not because of the bankruptcy," said Marc Levinson, the city's lead bankruptcy attorney. "The bankruptcy is an attempt to fix it," he continued. "If it hadn't been for the bankruptcy, the problem would have been worse. The city could not pay its bills." Evidence of municipal misery is widespread. Foreclosed homes are sold in front of the Civic Center so often that City Hall is plastered with signs warning auctioneers not to conduct business at the lobby information desk or the monument to fallen firefighters and police officers. Sixty percent of all borrowers in the Vallejo area owed more on their mortgages than their homes were worth in the first quarter of 2010, according to CoreLogic, compared with 24% of borrowers nationwide and 34% in California. Property and sales tax revenue are expected to drop 18% and 10%, respectively, in the current fiscal year. The city's general fund has plummeted 20% in the last two years. Trees go untrimmed, potholes unfilled. The economic development staff has been slashed to one. Even Wal-Mart has decamped from this city of 121,000. Vallejo has stopped funding senior centers and libraries. More Here.. 
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| Posted: 29 May 2010 11:24 AM PDT Greetings Jim, The Gold Currency Index continues to hold near all-time highs and probabilities still favor a period of consolidation following the recent surge from late March. Technical indicators are slightly bullish overall on the daily chart, so for now the uptrend remains in control. Looking ahead, if the short-term correction from earlier this month develops into a pennant or ascending triangle formation, another long-term breakout would become likely. However, if the index breaks below uptrend support near 30.40, a longer period of consolidation would be forecast. It is also worth noting that the positive divergence between the GCI and gold in US dollar terms remains in place. Best, Prometheus Market Insight
CIGA Fran says "Small enough to fail." 3 Fla. banks, 1 each in Nev., Calif. shut down WASHINGTON (AP) — Regulators on Friday shut down three banks in Florida and one each in Nevada and California, bringing the number of U.S. bank failures this year to 78. The Federal Deposit Insurance Corp. took over the Florida banks, all owned by holding company Bank of Florida Corp. They are Bank of Florida-Southeast, based in Fort Lauderdale, with $595.3 million in assets; Bank of Florida-Southwest, based in Naples, with $640.9 million in assets; and Bank of Florida-Tampa Bay, based in Tampa, with $245.2 million in assets. The FDIC also seized Las Vegas-based Sun West Bank, with $360.7 million in assets, and Granite Community Bank, located in Granite Bay, Calif., with $102.9 million in assets. EverBank, based in Jacksonville, Fla., agreed to acquire the assets and deposits of the failed Florida banks. Los Angeles-based City National Bank is assuming all the assets and deposits of Sun West Bank, and Tri Counties Bank, based in Chico, Calif., is assuming those of Granite Community Bank. In addition, the FDIC and EverBank agreed to share losses on the three Florida banks' loans and other assets. Losses will be shared on $437.3 million of Bank of Florida-Southeast's assets, $568.1 million of Bank of Florida-Southwest's assets and $210.8 million of Bank of Florida-Tampa Bay's assets. The federal agency and City National Bank agreed to share losses on $280 million of Sun West Bank's assets. The FDIC is sharing with Tri Counties Bank losses on $89.3 million of Granite Community Bank's assets. Sun West Bank fails, will reopen as City National The Nevada Financial Institutions Division on Friday announced that Sun West Bank in Las Vegas has failed and that its branches will reopen on Tuesday as branches of City National Bank. Sun West, which ended 2009 with only $9.3 million in equity capital, saw its equity cushion deteriorate even further in the first quarter of this year when it lost $4.665 million. Sun West reported that in the first quarter, it collected $3.788 million in interest income, but that amount was more than canceled by interest expenses of $1.489 million and another $3.783 million it set aside to cover loan and lease losses. After some high-profile bank failures in Las Vegas in 2008 and 2009, Sun West is the first bank in Las Vegas to fail this year. Sun West's closure is another reminder that thinly capitalized banks in Southern Nevada are having trouble surviving the recession that has decimated commercial and residential real estate values, pushed Las Vegas to the top of national foreclosure lists and led to a record local unemployment rate of 14.2 percent.
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| Posted: 29 May 2010 09:51 AM PDT
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| A Primer: Sovereign Debt Defaults = Social Unrest + Much Higher Gold Prices Posted: 29 May 2010 09:15 AM PDT The magnitude of current private and government debt, coupled with massive unfunded contingent liabilities for promises of future services to their citizens, will prove to be impossible for many nations to fund. Read More...
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| Funds seek Midas touch with miners Posted: 29 May 2010 09:08 AM PDT By Cameron French and Steve James http://www.reuters.com/article/idUSN2514925320100527 Top hedge fund stock pickers have extended their bets on gold, adding gold mining stocks to their investments in the precious metal. Last year, investors such as John Paulson and Richard Chilton piled into shares of the exchange traded fund SPDR Gold Trust (GLD.P), which is directly backed by the metal. This year, many managers have added shares of gold producers like Barrick Gold and NovaGold Resources, as well as the Market Vectors Gold Miners ETF, which owns stakes in several dozen publicly traded companies. 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 will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Among 30 of the largest equity-oriented hedge funds tracked by Thomson Reuters, including those run by Paulson and Chilton, 12 reported owning substantial plays on gold in regulatory filings that covered portfolios as of March 31. Gold is seen as a safe haven in a world stressed by the hangover from the financial crisis, particularly potential weakness in the euro because of the budget distress faced by many European governments. Gold has often worked as a long-term hedge against inflation when governments are forced to print money to keep their economies afloat. The addition of mining stocks to portfolios of the "Smart Money" 30 reflects continued faith in the price of gold, according to analysts and other investors. The metal hit an all-time high two weeks ago at $1,248.95 an ounce and is currently trading at around $1,215. "In the next two years it's going to $2,000 or I have to shave my hair off," said Charles Oliver of Toronto's Sprott Asset Management, referring to a pledge he has made publicly. He co-manages a $600 million precious metals fund. Oliver echoes the thinking of many investors that the best way to profit from a surging price now is through shares of a gold producer. "Gold bullion is defense," he says. "On the offensive side, if you want capital gains, (you want) gold stocks. We're in a bull market in gold and, generally speaking, most of the time gold stocks will outperform bullion." While gold stocks have actually lagged the metal's performance during much of the past decade -- which many attribute to rampant mining cost inflation in 2005-2008 -- the relationship appears to have reversed this year. During gold's run-up since the end of March, gold mining stocks have risen more than 16 percent, versus a 9 percent rise for the metal. A belief that this will continue has prompted many fund managers to increase their exposure to gold stocks. Paulson, who presciently bet housing prices would fall three years ago, announced plans late last year to make a big bet on gold by launching a new fund devoted to the metal. He has turned to gold as a currency alternative to the U.S. dollar, as he worries inflation could jump due to the political difficulty of removing the U.S. government's mountain of stimulus cash from the economy. At the end of the first quarter, Paulson held 31.5 million shares of the popular SPDR Gold Trust, as well as a 12 percent stake in Anglogold Ashanti and a 4 percent stake in Kinross Gold. Chilton's fund bought shares of Kinross and Barrick, among others, in the first quarter. Eric Mindich's Eton Park Capital bolstered positions in gold, including Barrick and Newmont Mining. And John Griffin's Blue Ridge Capital reported a 5.1 million-share holding of the miners ETF. Paulson raised a few eyebrows in March when he agreed to take a 9 percent stake in junior miner NovaGold. NovaGold, also favored by billionaire George Soros this year -- he now holds more than 8 percent -- owns 50 percent stakes in the Galore Creek and Donlin Creek deposits in British Columbia and Alaska. Both have huge reserves but are beset by multibillion-dollar start-up costs. "The criteria that appear to be used by some of these funds is they're looking for assets in politically safe jurisdictions -- Canada and the U.S. being targeted," said Paolo Lostritto, an analyst at Wellington West. An investment in a junior like NovaGold also suggests faith that the metal is headed upward, said Ian Nakamoto, director or research at MacDougall, MacDougall, and MacTier. "If you have a bias toward high gold prices, you would want companies that have a lot of potential reserves," he said. "You don't necessarily want gold companies that are producing now and selling into the market and getting $1,200" an ounce. "Maybe you want a company that's going to produce in three years and get $1,700." As a hedge against inflation, gold benefited from billions in stimulus dollars spent last year -- particularly in the United States -- to kick-start economic growth. It has pushed even higher in recent weeks as the European debt crisis has begun undermining the euro. Central banks, meanwhile, have reversed their past practice of selling gold and are now expected to add hundreds of tonnes of bullion to their holdings, a shift seen as a bullish signal. Adam Graf, an analyst at New York's Dahlman Rose & Co, sees those pressure driving gold to at least $1,800. "I think over the longer term gold should have upward pressure for quite a while," Graf said. Western countries "have printed a lot of money and keep doing it," he added. 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: 29 May 2010 08:58 AM PDT
In what could one day be seen by historians as a seminal speech presented before the Paul Volcker-chaired Group of Thirty's 63rd Plenary Session in Rabat, the ECB's Lorenzo Bini Smaghi had two messages: a prosaic, and very much expected one: of unity and cohesion, if at least in perception if not in deed, as well as an extremely unexpected one, in which the first notable discords at the very peak of the power echelons, are finally starting to leak into the public domain. It is in the latter part that Bini Smaghi takes on a very aggressive stance against not only the so-called "inflation tax", or the purported ability of central bankers to inflate their way out of any problem, but also slams the recently prevalent phenomenon of fear-mongering by the banking and political elite, which has become the goto strategy over the past two years whenever the banking class has needed to pass a policy over popular discontent. The ECB member takes a direct stab at the Fed's perceived monetary policy inflexibility and US fiscal imprudence, and implicitly observes that while the market is focusing on Europe due to its monetary policy quandary, it should be far more obsessed with the US. Bini Smaghi also fires a warning shot that ongoing divergence between the ECB and Germany will not be tolerated. Most notably, a member of a central bank makes it very clear that he is no longer a devout believer in that fundamental, and false, central banking religion - Keynesianism. First, a quick read through the "prosaic" sections of Bini Smaghi's letter. Bini Smaghi, who is a member of the executive board of the ECB, has a primary obligation to defend the ECB's public image in this time of weakness and complete lack of credibility. And so he does. When discussing the ECB's response to the Greek fiasco and contagion, he is steadfast that the response, although delayed and volatile, was the right one. Furthermore, he claims that the hard path Europe has set on is the right one, as it will ultimately right all the fiscal wrongs, even without the benefit of individual monetary intervention. Ultimately, the ECB is convinced that not letting Greece fail, either in the form of union expulsion or partial default, was the right decision, as "this sill force euro area countries to address their fiscal positions earlier. It’s not easy. But it will be done, because it can be done and it has to be done in any case. And, last but not least, because there are no alternatives." Alas, while we agree that admission is the first step on the road to recovery, the subsequent steps will prove to be insufficient. The imbalances in Europe are of such great magnitude that hoping that countries eventually grow into their balance sheets by way of austerity is simply a ridiculous assumption, and as such does not merit extended overviews. We note this with irony, because apparently the ECB, contrary to elementary school rule #1, favors quantity over quality. As the ECB board member says:
To this we ask: if a collective brain trust is charged with the goal seeked, and well compensated by taxpayers, duty to put together a 1,200 page report that confirm the primary tenets of the trust itself, will Mr. Smaghi give it 10 times the credibility of the ECB's report? Or how about one million typewriter-armed monkeys putting together 1,200,000 page "analyses" claiming that the Greek default is inevitable? We hope someone has the facilities to conduct just such an experiment. Perhaps the futility of such a simplistic act is the very reason why not more than a one-pagers is required to refute the central bank dogma. Thus the key axis of contradiction emerges: the ECB is willing to set off on the "demonstratedly" arduous journey of forcing its member states to right their fiscal (income statement) evils, yet while not acknowledging that the key missing link, balance sheet restructuring, is not necessary but critical. There is a reason why plain vanilla restructurings focus on the balance sheet, and not on the income statement: a company with a fresh start balance sheet can grow its income statement without its debts being a hindrance, on the other hand, rarely if ever, do income statements allow companies to grow into untenable balance sheets. This is the main flaw in the ECB's plan. And it is these very contradictions that force the European populace to lose its credibility in the ECB, a concern which even the central bank is all too aware of. The balance of the "prosaic" part of the speech is along the same lines: merely a defense of the ECB's line of actions, driven primarily by a direct response to the market, and thus a very short-sighted and reactive, instead of proactive, policy response, which merely invites the market to test out the ECB's lack of resolve. And once again, the ECB is not naive and is fully aware of this, yet it redirects attention to other source of "market-test" weakness: "Financial markets are testing each country, one by one, to see whether they are willing to adopt the necessary budgetary measures, starting with those which seem to be facing the greatest hurdles to consolidation." Bini Smaghi is right and wrong here: the market will continue testing country by country, but not to determine fiscal resolve, only to take advantage of the lack a monetary one. And so from crisis to crisis, the market will continue reaching deeper until it finally tests the very core of the eurozone: Germany. And speaking of Germany, this brings us to the other part of Bini Smaghi's letter. In one of the first open shots of public confrontation, we see that the ECB has been very much displeased not only by rampant fear-mongering, but by the words of Germany's Angela Merkel, whose recent repeat declarations that Greece could be allowed to leave the union, have undermined the bedrock of the ECB. Furthermore, as the WSJ reports, "in a rare show of defiance for the consensus-driven ECB, Germany's central bank head Axel Weber told the German newspaper Börsen-Zeitung that he viewed the bond-buying decision "critically" and that it carried "substantial stability risks." Is this the type of rancorous infighting between Europe's two main powers, that will seal the fate of the Eurozone experiment far more certainly than parliamentary stormings in Athens? We read in Bini Smaghi's letter the first fingerpointing of displeasure by an ECB official aimed squarely at Germany:
We hope that the ECB's displeasure by the kind of racketeering that Americans have grown to know and loathe, as it is performed either openly by politicians who directly threaten with end of the world scenarios every time they wish to get their way, or indirectly, such as when the market crashes a 1,000 points when it appears that the Fed is on the verge of losing its secrecy, is espoused by more individuals and organizations. On the other hand, we will closely follow the now open feud between German and Europe's Central Bank - if past experience is any indication, infighting between these two will only lead to mutual weakening, and result in an even faster forced reorganization of peripheral European countries, and, eventually the euro. In this regard, perhaps Bini Smaghi's speech created far more damage than damage control: now that the public's, and more importantly, the market's, attention is be drawn to the duel between Germany and the ECB, this will merely destabilize the monetary union even more, now that monetary and political unions, and conflicts, are synonymous, a point not lost on the ECB executive himself: "As I said earlier, monetary union is de facto a political union." And now that European monetary "politics" are the center stage, we find two other pearls in Bini Smaghi's speech. Not too surprisingly, the ECB is now directly pointing a finger at the Fed, where conventional wisdom has long held the belief that due to its ability to determine independent monetary policy, backed by the world's reserve currency, the Fed can and always will easily inflate its way out of any complication.
This is probably the best encapsulation of the threats, or rather threat, that another QE episode by the Fed will bring with it. In essence the ECB is saying that should the Fed pursue another QE episode, the imminent explosion in short-end interest rates will lead to a solvency crisis within the US itself, monetary policy or not. Bini Smaghi points out one very critical truth: in not having a reserve currency, and thus protected by the belief that the ECB can inflate its way out of complication, it is forced to pursue fiscal reform, much sooner than the US will, which will only result in a much greater crisis in the US, once it becomes clear that the marginal influence of monetary policy will be drowned out by a sea of fiscal imprudence. And for the one true shining example of the latter, look no further than the CBO's 10 year budget deficit estimates.
Was this the first shot across the bow in the the transatlantic central bank wars? Too bad the ECB will be insolvent overnight if the Fed decides to truly escalate and pull all its swap lines tomorrow. Why risk retaliation? This is easily the most important question needing answering over the next several weeks. Last, but not least, are the following zingers that have no other intent than to poke at the ever larger holes appearing in the fabric of that one modern false economic religion known as Keynesianism.
Is this the last degree of "religious" doubt before outright revulsion set in and the oligarchic heretics emerge? More so than the question of whether or not the euro is viable, is whether the beginning of the end for Keynesianism is approaching? If so, the imminent revolution in Western world economic thought will be unprecedented, and the resulting global reset will lead to a world where daily news will no longer be dominated by headlines about more record banker theft going unpunished, co-opted and facilitated by a cheaply purchased legislative, executive and judicial system.
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| Oil Drilling Liability Cap Led To The Gulf Spill Posted: 29 May 2010 07:44 AM PDT
From The Daily Capitalist I never ever thought I would agree with Nancy Pelosi on anything, yet here it is:
I'm not against Big Oil, Little Oil, or anyone in the Oil Patch, but the liability cap is just another example of how industry uses the government to gain market advantages at the expense of someone else. In this case it is the Gulf Coast inhabitants and those that live off of that huge resource. As I understand the law, BP is responsible to pay 100% of the cost of the clean-up. What the liability cap does is to cap economic damages to $75 million. What that means is if anyone suffers a loss of income or property as a result of a spill, BP is only obligated to pay $75 million even though the losses may be in the billions. That is not right. Businesses seeking advantages from legislators is not news. While lobbying is often a proper and necessary response of business to legislation that would be harmful to them, it is a two-edged sword when they try to gain economic or competitive advantage. Our history is full of examples, most recently, tire import tariffs. While it is right to condemn business for this we should blame legislators who have the primary duty to act in the best interests of all the people. At least one could say that we understand that business is motivated by self-interest, but Congress is held to a higher ideal. While politicians preach this principle they rarely live up to it. In free market capitalism, no one has a legal or a coercive advantage over anyone else. If I commit a civil wrong, in this case the tort of property damage and the resulting economic loss, I should be fully liable for it. That is, I should pay the cost. If I go broke, so be it. If I do something with willful, wanton disregard for safety I may be grossly negligent which may allow a court to impose punitive damages. In my view, the liability cap was a major cause of this environmental disaster. Assume for a minute that there was no liability cap in place. BP was engaged in very risky drilling activity that posed potentially huge losses if they acted negligently. Drilling at 5,000', I am informed, is not like drilling at 500'. Like all businesses, BP must weigh the potential risks against the potential gain of any enterprise. Like most businesses, they lay off as much risk as they can by buying insurance. If they didn't buy insurance then they weighed the risk against their assets and net worth. I am going to guess here that the economic loss of the BP spill will be far more than the cost of the clean-up. I assume that is always the case or otherwise oil companies would not have sought a liability cap. When they evaluate the risk of such risky activity, then they know that whatever damage they cause, their liability will not exceed $75 million. That is a drop in the bucket for a company whose after-tax earnings were $6.1 billion in Q1. Thus I believe that liability is a significant deterrent to companies involved in risky activities. Their response to such liability could be: 1. Determination to not undertake a risky project because of the potential liability. This happens all the time in industry. Projects such as chemical plants, nuclear research, nuclear energy, may be too risky in light of the potential reward. It may be beyond the company's ability to respond in damages, thus risking the company's future. It may be impossible or prohibitively expensive to get insurance. 2. Determination to engage in the project but with added safety protocols. This is certainly possible with a large company such as BP. They may evaluate the risk and decide they can safely undertake the project. Obviously this was BP's choice here. But they were negligent and they should pay all damages they cause. If they go broke, they understood the risks going in. 3. Determination to engage in the project but with additional insurance to cover potential losses. If the project is undertaken because it is risky but determined to be within their ability to manage the risk but not to withstand damages, they could obtain insurance. If the insurance company determined that the risk was too high and refused coverage, the company would most likely decide to not undertake the project. Insurance companies have a lot at stake because they bear much of the risk involved in such projects. They exercise great care by investigating their underwriting risk and require companies to satisfy many conditions related to safety. The breach of any policy safety condition may invalidate the insurance. Thus there are market forces that try to eliminate risky projects. 4. Determine to engage in the project but with no insurance or other risk-related safety protocols. This would be foolish business behavior by any company. Assume rational players in the industry, the project would not be undertaken. Most oil companies have risk-reward protocols to minimize risk because, as public companies, no one would invest in them since risky projects would jeopardize investors' capital much less the future of their company. I think it will be shown that BP was not only negligent, but perhaps grossly negligent and there is no way to punish them for their behavior. I understand that they may voluntarily agree to compensate people with economic losses. To not do so would effectively end any future drilling in U.S. waters or perhaps worldwide. But that was not a sufficient deterrent to prevent them from entering into such projects. Let the lawyers have at them.
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| Canada 1/4 Ounce Maple with Odd Stamping Posted: 29 May 2010 06:46 AM PDT I saw this 1/4 ounce Gold Maple and did a double take. To see what that extra detail is, I took a picture. It has an oval with the year "2000" and sort of like fireworks imagery. I tried doing a web search and found nothing like it. http://www.google.com/images?q=canad...tart=0&ndsp=20 Has anybody seen something like this before (see attached image) ? Is it Legit ?
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| International Forecaster May 2010 (#9) – Gold, Silver, Economy + More Posted: 29 May 2010 06:44 AM PDT By Bob Chapman, The International Forecaster US MARKETS The DOE reported crude oil inventories up 646,000 barrels, gasoline fell 3.19 m/b and distillates rose 1.52 m/b. The commercial paper market fell again by $2.6 billion to $1.073 trillion. Goldman Sachs wants to settle with the SEC exactly as we predicted. They would neither admit nor deny and be fined $1 to $ 2 billion, which is chump change to them. Lehman is seeking return of $8.6 billion that JPMorgan Chase seized before Lehman filed for bankruptcy. The claim is Morgan had unparalleled inside knowledge. There is no honor among thieves. Part of the deflationary mode is borrowers are paying down debt and saving at a 3.4% rate. It could be the elitists, as we speculated months ago, want to take down the entire world financial system in the next 1-1/2 to 2 years. Hi Ho stimulus. The fiat Ponzi scheme is collapsing. Irrespective what the Illuminists and their minions say in Europe the euro is on its way out. It could take two years, but this unnatural creation deserves burial. There still is a scramble to have a big conference in a year and devalue currencies and write off debt to default. We do not think they can pull it off. Austerity programs will only accelerate to process. By the end of the year EU trade will contract and at best remain stagnant. There is really no relief in sight for Europe. Who can blame the Germans for wanting out? The world is going upside down. During the past few months the financial world and nations have been consumed with the problems of sovereign debt and so they should be. Debt is a worldwide problem, but that problem has been exacerbated by the ability of banks, brokerage houses and insurance companies to manufacture derivatives. The Greek tragedy continues as the IMF and others get ready to fund not only Greece, but all the PIIGS as well. That includes Canada, the UK, which has refused to contribute, because they are broke, and the US whose end will be about $60 billion. Greece is rolling their old debt in order to bail out the banks. It won't be long before Spain, Portugal, Ireland and Italy will be doing the same thing. The other euro zone members are saying why should we bail out these countries, which in turn are bailing out banks? These euro zone countries are saying all we did was what everyone else was doing. Governmental debt has hit unprecedented levels worldwide. It is now called a sovereign debt crisis. Any recovery in any of these countries will remain anemic as long as this situation exists. More debt is being created via stimulus in some countries, and in others austerity has begun. In the US real growth is only 1.3%, and that is fading fast having fallen from 6.5% in the fourth quarter. The top participant was penalized in 1985 at the Plaza Accord and in 1987 at the Louvre Account and as a result entered depression in 1992. That is Japan. Their debt is now 200% of GDP. Structural impairment still sticks out like a sore thumb. They are trapped in the same quandary, as Europe is, growth via debt. It is interesting to note that if global military spending of $1.5 trillion ended there would be o trouble funding debt. The US spends more than $600 billion a year, or over 40% of the world's total, so they can bludgeon the world's inhabitants into doing what the US wants them to do, it is called tyranny. The foregoing is certainly not growth. Growth has to come from the development of domestic markets, not as it has been or is today via foreign trade and the endless creation of debt. The experiment of free trade, globalization, offshoring and outsourcing hasn't worked. Look at what it has done to the US economy. It has gutted it. It has been based on the exploitation of what is essentially slave labor and the theory of comparative advantage. This method of impoverishing the US economy has been funded by the workers themselves via their savings and those of their pension plans. Instead of transnational conglomerates working with foreign governments to keep wages low they should be working to increase them. That never occurred to the Illuminists who run these corporations, nor governments such as China. As a result we have had the opposite effect. Slightly higher wages in China and much lower wages in the US. The ultimate result is going to be tariffs on goods and services to level the playing field. The euro for Greece and others works both ways. The weaker members acquire a stronger currency and as a result a stronger economy based in part on the strength of its fellow members. Thus, Greece surrendered its sovereignty for the ability to create domestic debt. Unfortunately they cannot print euros, so they cannot devalue. Instead they default unless subsidized by other members. The dollar had been probing lows on the USDX at 74 just several months ago. In order to solve the dollar weakness and sap euro strength a crisis was created. From out of nowhere Greece was exposed for its debt. Before this took place starting in October major NYC banks were accumulating dollars, because they knew what was going to happen, because they planned it that way. Do not forget Goldman Sachs knew all of Greece's secrets – they created them. The events in Greece have left many European banks badly exposed and riding to the rescue has been the Fed with a new swap facility. Last time, over 15 months, the Fed says they used $583 billion. The Fed is again printing money from out of thin air to be used by foreign nations to rescue European banks. They, of course, would have us believe it was to save the European financial structure, when the move was to save private banks that should have never made loans to Greece and other PIIGS, nor purchased their bonds. As professionals they knew better. Effectively the American taxpayer is funding these banks and they pay the price for this via inflation and greater debt. The Fed is further debasing the dollar. As a result of what the public would call hocus-pocus, the price of gold has been rising. There are other factors making gold rise, but this is the latest. Finally professionals are paying attention to these problems, but more importantly, that the "President's Working Group on Financial Markets" is manipulating all markets, but particularly the gold and silver markets. It won't be long, within two weeks that a class action lawsuit, one of many by silver owners, will be filed against JPM Morgan Chase for manipulating the silver market. That should get Wall Street's and Washington's attention. This kind of suit is very difficult to defend against. Like Barrick Gold not many years ago, they admitted taking direction from the US government for hedging in the gold market, so will Morgan defer to the US government to explain their actions. Irrespective, Morgan will lose and the manipulation of the silver market and probably the gold market will end. It should also be noted that the CFTC was complicit in this criminal activity. They had all the evidence and had to be forced to investigate. The Justice Department was forced to investigate as well. This swap being done by the fed on the short-term could be somewhat injurious to gold, because the recipients are very liable to use some of those funds to short gold and silver. As we explained earlier there is a fight going on between the dollar and gold for currency supremacy. The recent dollar rally was part of the plan to keep the dollar as the preferred asset or currency. It didn't work all that well because gold rose more than the dollar. The dollar swap will be used to keep European banks from going under and that is inflationary. The Fed is obviously buying their subprime assets. The bank proceeds from the garbage sold to the Fed will in all likelihood be used to purchase US Treasuries. In a late note now that Fitch has lowered Spain's credit rating from AAA to AA+, they'll be even more pressure on European banks and government for Fed assistance. Now not only are the banks broke, but so are the governments. That said how could Treasuries be a store of value? They cannot thus; sooner or later professionals will be storming the gold parapets. If you think markets are currently volatile, just wait you haven't seen anything yet. The Market Composite Index, a measure of mortgage loan application volume, increased 11.3 percent on a seasonally adjusted basis from one week earlier. The Refinance Index increased 17.0 percent from the previous week. This third consecutive increase marks the highest Refinance Index recorded in the survey since October 2009. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier and is the lowest Purchase Index observed in the survey since April 1997. "Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates," said Michael Fratantoni, MBA's Vice President of Research and Economics. "In contrast, purchase applications fell further this week, following last week's sharp decline, keeping the purchase index at 13-year lows." The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.80 percent from 4.83 percent, with points remaining constant at 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed-rate recorded in the survey since the week ending November 27, 2009. There was a spike in purchase applications in April, followed by a decline to a 13 year low last week. As Fratantoni noted last week: "The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season." Top national GOP recruit Vaughn Ward on Tuesday lost his primary in Idaho after a series of missteps by his campaign, throwing the Republican Party's chances in doubt against top-targeted Rep. Walt Minnick (D-Idaho). Ward was trailing state Rep. Raul Labrador (R) 48 to 39 percent, with 90 percent of precincts reporting. The Associated Press called the race for Labrador early Wednesday. Ward becomes the latest establishment favorite to go down in defeat, although his loss will more likely be chalked up to his campaign's myriad gaffes. He was one of the first 10 candidates named to the final stage of the National Republican Congressional Committee's (NRCC) Young Guns program for its top 2010 hopefuls this cycle. Over the past month, however, his campaign has fallen victim to multiple charges of plagiarism, revelations that he didn't vote in the 2008 presidential election and a slip-up in which he said (in front of his Puerto Rican-born opponent) that Puerto Rico is a country (hint: it's not). That opponent, Labrador, moves on to the general election and leaves national Republicans to evaluate where the race fits in their list of priorities this November. Labrador, an immigration attorney, is something of a blank slate to Washington. He joined the NRCC's Young Guns program but has yet to reach the goals required to be named to the first stage of the program. Given the right candidate, the freshman Minnick's district should be at the top of the GOP's target list. It went for Sen. John McCain (R-Ariz.) with 62 percent of the vote in 2008, but former Rep. Bill Sali (R-Idaho) severely underperformed the top of the GOP ticket, losing narrowly to Minnick. Sali backed Labrador, while Ward was backed by former Alaska governor Sarah Palin (R). Minnick has proven a savvy congressman, voting conservative on almost all major pieces of legislation and building a sizeable war chest for 2010. Republicans can't rely on merely a good environment to take him out. In other races in Idaho on Tuesday, Gov. C.L. "Butch" Otter (R) and Sen. Mike Crapo (R) both overcame nominal primary opposition, as did Rep. Mike Simpson (R-Idaho), who faced a reasonably well-funded opponent and was a Troubled Asset Relief Program (a.k.a. bailout) supporter. All will be heavy favorites in the general election. The federal prosecutors investigating Goldman Sachs are focusing on Timberwolf, the infamous "shitty deal" repeatedly cited in a tense Senate hearing last month, according to people who have been contacted by the Manhattan U.S. Attorney's office. The probe raises the possibility of criminal charges against the storied Wall Street firm, which was charged in April by the U.S. Securities and Exchange Commission with civil fraud for allegedly misleading investors about another subprime mortgage-related security called Abacus. Investigators from the U.S. Attorney's office have reached out to individuals involved in the deal, including David Mapley, the former independent director of an Australian hedge fund who claims that the firm collapsed shortly after Goldman sold it $100 million of securities in Timberwolf, a $1 billion collateralized debt obligation. In an interview with the Huffington Post from his office in Geneva, Mapley said that he has been contacted by the U.S. Attorney's office and that he expects to be interviewed by them soon. Mapley brought his complaints about Goldman's role in the deal to the SEC in December 2007, met with SEC lawyers several times in 2008 and he says that he continues to talk to them. "Overall, the whole thing was a fraudulent concoction," says Mapley, who says that it was one of the most egregious cases he had seen in his decades working in finance. "We examined the whole trade, what led up to the trade, the way it was marketed and everything about it was inaccurate. You think you're buying one thing and what you see is totally different." Among the most serious allegations, Mapley claims that Goldman sold Timberwolf securities to the fund at marked-up prices — while Goldman's trading desk was busy shorting such CDOs tied to toxic subprime mortgage securities. Mapley says that the hedge fund, Basis Yield Alpha Fund, where he was an outside director, ultimately went into liquidation "with Timberwolf tipping the balance." To help us understand exactly what's going on, and why debt loads that have been growing for years have suddenly become a market-melting issue, I turned this week to Satyajit Das, an independent credit analyst in Australia. Though his vantage point is half a world away, Das is frequently sought out as a consultant by central bankers, government officials and fund managers for his unconflicted insights and his unusually clear explanation of the dense pathways of debt and its derivatives. "It's never incremental news — it's how old news sinks into the people with brains the size of caraway seeds who populate the financial markets," he said from his office in Sydney. "They always depend on selective information and process it in uneven ways. Even smart people tend to believe what they want to believe, and they right now they're using the idea that central banks and governments will miraculously prevail as a crutch. This is magical thinking. I have said from the beginning that governments won't have enough money to bail everyone out." Das believes the central problem is that governments have already spent more than $1 trillion in taxpayer-generated and borrowed funds but are not getting as much bang for their buck as expected. If you strip out government spending and low interest rates, he notes, there's not a whole lot of activity going on. The government has tried to prime the pump, but the pump is still just dribbling. He suggests we not be fooled by recent earnings reports or government stats, pointing to U.S. bank earnings as especially inaccurate. JP Morgan has a balance sheet of $1 trillion and can borrow at essentially zero, he notes. So if they just go out and buy 10-year bonds at 3% they should be able to earn $30 billion a year. Yet the bank announced a profit of $3.3 billion last quarter. "What does that tell you? It says they are losing money on everything else," Das says. "Strip out the gifts, and it's big net loss." And at big industrial concerns like General Electric, he argues, revenue growth is anemic — so earnings growth is solely stemming from cost-cutting and layoffs. – This was a section from the most recent issue of the International Forecaster. You can read the full 39 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. 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| Precious Metal Protection from Frightening New Creatures Posted: 29 May 2010 06:21 AM PDT The big news, of course, is that "Private-sector scientists led by Craig Venter have developed the first living cell controlled by synthetic DNA." This is, I think you will agree with me and the rest of the world, completely amazing! They have actually taken a synthetic chromosome that they cooked up and transplanted it into a recipient cell, and thus created a new, different organism! A new form of life made from materials you probably have around the house! There is, however, no mention of whether they raised their arms in triumph and cried out excitedly, "It lives! It lives!" like in the movies, although I would, if I were them! Well, as exciting as this is, it becomes Very, Very Interesting (VVI) in a terrifying "end of the world" kind of way when one considers that almost any creature is now possible, ranging from one-celled killer viruses up to, and including, powerful bio-weapons like demonic, robotic cyborgs that have laser beams that shoot out their eyes, they can't be killed, they can't be stopped from killing ("That's all they do!") and they will all have, ominously, badges. And how about flying monkeys, like in the Wizard of Oz? The unintended consequence is that they will be coming after you because they have badges, too, perhaps making good on the witch's promise of, "I'll get you for this, my pretty! And your little dog, too!" Naturally, in the face of such an onslaught of indefinable, screaming dread at the sheer bulk of the unintended consequences that will develop as a result of being able to make creatures on demand, I fall back to Basic Mogambo Strategy (BMS), which is to buy gold, silver and oil, although with engineered creatures, maybe not oil, as it would be possible to create some kind of living creature that would excrete oil, perhaps after eating plastics and pollutants! And there is no reason why it can't taste like chicken, too, whereupon everything is fine until it evolves into these creepy things that hide under the furniture and wait until you walk by, and then they jump out, grab your ankle, and suck all your blood through your skin. So you can see how a paranoid and frightened guy like me can only see this as an historic moment of being able to create new creatures-by-design, and is truly a Whole New World (WNW) where, from now on, it will be a struggle between undreamt-of benefits versus tragic unforeseen costs. And the future of gold and silver? Brighter than ever! Whee! This investing stuff is easy! The Mogambo Guru Precious Metal Protection from Frightening New Creatures originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." More articles from The Daily Reckoning….
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| Posted: 29 May 2010 06:21 AM PDT We have the currencies and metals moving higher versus the dollar, adding to yesterday's rally. I was busy, getting trades together yesterday, and then went to do some trades, and was shocked at the move the currencies had made versus the dollar in such little time. The leader of the pack was the Aussie dollar (AUD), which I made a big deal about yesterday, saying that the fundamentally sound currency had been oversold. The other high flyin' currency yesterday, as I thought it would be, was the Brazilian real (BRL)… It was a day of "risk on"… But it was a day of "really" putting on risk! And for the first time in a week, gold did not sell off with the euro (EUR) rallying… So it was all seashells and balloons yesterday for the risk assets. Overnight, we've seen yesterday's gains held to and added to, so we've really got it going on today, on this Fantastico Friday! Here's the thing to think about this morning… It is a Friday before a 3-day holiday weekend, which means the liquidity in the markets will dry up after noon… London traders will be heading to the pubs, and NY traders will be heading to the Hamptons… Which means… The markets can become quite wild… Or they can be calm, and everyone gets to close their books and head out without risk on their books. I would have to think that with the rise in the euro the past two days being so strong, that the short positions in the single unit are getting squeezed big time! As someone pointed out to me the other day… A currency's rise because people are taking a long position in the currency is different than a currency's rise because people are closing out short positions… And that's true… However, I'm now thinking that this move in the euro the past two days is something more than short positions closing… I see where the boys and girls at Morgan Stanley believe the dollar will rise versus the euro as Greece undermines European Central Bank (ECB) credibility… But across the street, Goldman Sachs believes the selling in the euro is overdone, and is about over with… This is a good thing, folks… A "two-way" market… For a while there we had everyone on the same side of the ship… Now it's more evened out… We certainly don't want that ship listing to one side, eh? So… As I said above, gold is holding steady this morning, and has even added $2! Speaking of gold… A friend of mine sent me an article that outlined what's going on in Greece with gold… It seems that the worried Greeks are paying more than $1,700 per ounce for gold coins… And prices paid in the black market are probably much higher! So… My friend said to me… "Chuck, Gotta wonder if Panicky Yanks might be the next group to start paying up for gold." I said, as a holder of gold… I'm all for that! I saw a blurb on the screens at home last night about Indian GDP that's expected to grow 8% this quarter… If that's a fact, Jack, then the Indian Central Bank needs to get on the rate hike bus now! Don't wait for a newer bus to come along… Get on the first rate hike bus that comes along, and don't look back! Interest rates in India need to be higher, and that should underpin the rupee (INR)… Economic data wise on this Fantastico Friday… The data cupboard this morning here in the US has two of my fave reports, personal income and spending… I would say that given the rise in employment, according to the BLS, last month that income actually has a fightin' chance of outpacing spending… That would be a novelty, but one that has to remain in place in my opinion. We'll also see the Chicago Purchasing Manager report (manufacturing), and the U. of Michigan Consumer Confidence… Yesterday we saw the Initial Jobless Claims edge higher to 460,000 last week, and… First quarter GDP was revised downward to 3% from 3.2%… Most observers had thought economic growth would be revised upward, but that was not to be. So… I made the statement on the desk that GDP wasn't as strong as expected, and Chris Gaffney replied… "But Chuck, 3% is nothing to laugh about; 3% growth is strong." Ahhh grasshopper, I said… But let's not forget that the economy right now is having the pump primed by government spending, bailouts, stimulus, and funny accounting… He agreed, and we went back to work… The data cupboard in Europe is pretty bare, but we did get a strong GDP report from Sweden this morning (1.4%) as they continue to emerge from their recession. I truly expect Sweden's Central Bank, The Riksbank, to raise rates 25 BPS at their meeting in July. By then the markets will be moving past the Eurozone budget deficit problems, and so the timing of a Riksbank rate hike seems to be good… And in Canada… With the Bank of Canada (BOC) meeting next week looming large, Canada will print their latest current account balance today… Look for improvement in their deficit to print… And that could be the deciding factor in the BOC's decision to be the first G-7 nation to raise interest rates next week. I feel that it's coming… Do you feel it, too? Do you feel like I do? Come on, let's do it again. Do you…you, feel like I do? And just for fun… Did you notice how the Chinese renminbi (CNY) weakened versus the dollar once the US officials left China? This pattern of doing this has been going on for years now… I don't think we have to worry about the Chinese allowing the renminbi to weaken any more versus the dollar… It's just a "notice" to the US, that's all… Then there was this… Work an hour per month; get counted as a new hire; get fired and rehired; and get counted again as a new hire… And then do it over and over again… Sounds like a real fishy, underhanded way to push jobs numbers higher doesn't it? And we would have nothing to do with this, right? Well… Strap yourself in, folks… Census workers are blowing the whistle, and describing exactly what I explained above. Are you upset enough to contact your representative in Congress? You should be! This is getting absolutely ridiculous, the games the government keeps playing with data to make it look better, so you feel better, and go out and spend… When the only thing you should be spending money on is paying down debt, and once debt is paid down… Then getting yourself out of Dodge… This could be the last chance saloon, folks… Oh the games people play now… Every night and every day now… Never meaning what they say now… Never saying what they mean… Chuck Butler Currencies and Metals Rally originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." More articles from The Daily Reckoning….
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| Coin (Friday and) Monday: World Cup Commemoration Posted: 29 May 2010 06:21 AM PDT Heritage Auction Galleries Written by John Dale (With Memorial Day on Monday, next week's Coin Monday is appearing here early. — The Heritage Blog) It's just about World Cup time, when the greatest footballers from around the globe put on the national uniforms to seek out glory. Like just about every other World Cup tournament, this go-round has had its controversies. The host country! The Thierry Henry handball incident! The anthem! (Though you'd never hear me complaining about the opportunity to see…I mean, listen to Shakira.) All of these seem pretty trivial, though, compared to the controversy when the United States was chosen to host the World Cup in 1994. At the end of the 1980s, when the selection was made, there was no prominent professional "football" league (as the rest of the world understood it) in the United States, and the country hadn't qualified for the World Cup since 1950. The U.S. national team qualified for the 1990 World Cup, however, starting a streak of World Cup appearances that will continue in South Africa. Major League Soccer, which had its roots in the 1994 World Cup bid, is going strong and expanding. And the 1994 World Cup left a numismatic legacy for U.S. collectors as well: a trio of commemoratives. The middle coin of the set is a silver dollar, a proof example of which appears in the June Long Beach U.S. Coin Auction. On the obverse, two players are pursuing a ball; no word on whether the player wearing number 7 is going to flop and get the player wearing number 10 stuck with a spurious red card. The reverse is a shared reverse among all three coins, with the official logo of the 1994 World Cup squarely in the middle. The silver dollar proved extremely popular, with more than half a million proofs sold. The less expensive clad half dollar did even better, with a slightly greater number of proofs and more than twice as many uncirculated-finish coins in the final tally. Even the gold half eagle, notable for showing the World Cup trophy almost alone on its obverse, sold better in proof format than any commemorative half eagle issue had in the previous four years. While the Dallas experience has evolved from World Cup action in the Cotton Bowl to Major League Soccer in Pizza Hut Park, the 1994 World Cup commemorative coins offer reminders of how "the beautiful game" was reborn in the United States. If the World Cup ever returns to the United States (2018? 2022?), perhaps commemorative coins will come again; if so, I hope the designs are worthy of celebration. To leave a comment, click on the title of this post. 
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| Posted: 29 May 2010 06:20 AM PDT Bullion Vault SO I WAS having another nightmare about the inflation in consumer prices that is guaranteed by the Federal Reserve creating so much money, writes the Mogambo Guru from Tampa, Florida, for The Daily Reckoning. This time, my nightmare was some kind of weird replay of The Lord of the Flies, which seems kind of odd since I haven't read, or thought about, that book since the '60s when I was required to read it for English class, and I really don't remember much about it except that there was a pig (which I assume was a metaphor for the Federal Reserve), and everyone reverted to acting like tribal savages, killing each other in gruesome fashion, which I assume was because inflation in prices was raging across the island and food cost so much that everybody was starving, which would explain angry people killing each other… Hey! This economics stuff is easy! I don't remember my teacher stressing this obvious metaphor, however – although, now that we are suffering due to the utter failure of the Federal Reserve, maybe he should have! So anyway, there I was in bed, tossing and turning, screaming in my sleep, yelling, "No! No! No!" when my wife suddenly jabbed her elbow in my side hard enough to rudely wake me up and/or crack a rib, and yelled, "That's enough! Go and sleep in your Stupid Mogambo Bunker (SMB)!" Dejectedly, I trudged out into the night to the SMB with my pillow in one hand and my teddy bear in the other. As I approached the door, I was suddenly aware that I could faintly hear, through the walls, the Mogambo Fed Alarm (MFA) ringing its little heart out, going "clang, clang, clang!" whereupon my heart started going "clang, clang, clang!" too, and I was scared, really scared, and I hugged my teddy bear close to me for comfort. The security system asked for a Secret Mogambo Code (SMC) to open the blast-proof door, and my trembling finger entered 1-27-1756 (Mozart's birthday). As the door swung open, I raced to the Mogambo Fed Alarm (MFA) to see, you know, what in the hell was happening, clang, clang, clang! Well, I got shooting pains across my chest and my left arm went numb when I saw that the Federal Reserve had increased Total Fed Credit last week by a whopping $28.8 billion! In One Freaking Week (OFW)! Clang, clang, clang indeed! Usually, this Fed Credit is pumped into the banks, giving them the power to loan almost 100 times this money, or a 1000 times the money, or a zillion times the money (thanks to the fraud of fractional-reserve banking gone crazy). This time, however, they used most of the money to buy up (thus monetizing!) $23 billion in debt! Gaaahhh! I don't know what it is that the Federal Reserve bought with $23 billion in one week, and I would not believe them even if they told me, mostly because the government has been caught, like Obama, lying, lying, lying to me so long, about so many things, but which I suspect is mostly just another $23 billion of worthless bank debt gone bad and is threatening to drag another bunch of butthead banks into bankruptcy. My teddy bear looked into my eyes and solicitously said, "You need something to calm down! Take a handful of those pills your doctor is always badgering to you take, and wash it down with something cool and soothing. Like tequila!" Always ready to take such good advice, I did it, only to discover that taking a long, hard pull on a bottle of cheap, rot-gut tequila is neither "cool" nor "refreshing" – but that only shows how little teddy bears know about real life, I suppose, and what an idiot I was for listening to him. So, my throat burning, gagging and gasping for air, I decided that the better route was to look at some other statistical facts and figures, perhaps to find some glimmer of hope that we are not, as I so often say, "Freaking doomed!" My hopes were dashed, as I immediately saw that the monetary base jumped up to $2.02 trillion from $1.97 trillion last week, too! Suddenly, with the dangerous direction that the money supply is taking, thanks to the Federal Reserve creating so much of it, my brain recoiled in horror and spasmed painfully as I remembered that horrendous inflation in consumer prices is guaranteed by such a huge increase in the money stock. My mind, in some kind of weird escape-from-reality limbo, was swamped with more visions of flies ("buzz, buzz, buzz!") and people killing each other ("whack, whack, whack!") to keep from starving to death ("Let's go out for pizza!"), and then I remembered that Buying Gold, silver and oil will protect me! Whew! Instantly, with this salvation to hold onto, I was back in the real world, and there were not yet any flies, and there were not yet any people killing each other, and there were not yet any people starving because the price of food keeps going higher and higher as the Federal Reserve keeps creating money and the federal government keeps spending the money to help people cope with the higher prices of food which makes the price of food go higher. And so while there is still time before the collapse because of the madness in government and the Federal Reserve, there is also plenty of time to accumulate the sanity of gold, silver and oil. Whee! This investing stuff is easy! Buying Silveringand gold today…?
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| Silver Prices Retreat in May 2010 Despite Rallying Final Week Posted: 29 May 2010 06:20 AM PDT Silver prices soared this week, but nevertheless declined during the month of May after a 6.4% increase in April.
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| Bullion & Business May 2010 Recap Posted: 29 May 2010 06:20 AM PDT
The final week of the month saw some stabilization. Commodities rose as a group as did world stocks, with the exception of the Dow which retreated 0.56 percent. For the month of May, however, only gold shined as safe-haven buying lifted the yellow-metal 2.9 percent in New York and 2.4 percent in London. Silver fell modestly, but other metals were pulverized — platinum and palladium by double digit percentages. In other markets, crude tumbled 14.1 percent and major world indexes fell between 3.09 percent and 8.29 percent. The Dow ended its worst May in 70 years. (…) © CoinNews.net for Coin News, 2010. |
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| PCGS Coin Sniffer™ Helps Detect Coin Doctoring, Hobby Protection Steps Posted: 29 May 2010 06:20 AM PDT
PCGS announced that it has a process in development which will detect any foreign substance on a coin's surface, and also announced a major lawsuit filed against alleged coin doctors. According to PCGS officials, in conjunction with the development of coin recognition technology launched in March of this year, PCGS has been developing a process to detect foreign materials and other enhancements to a coin's surfaces. Using energy dispersive X-ray spectrometry (EDX), Fournier Transform Infra-Red Spectral analysis (FT-IR), Raman Spectroscopy and other similar analytical techniques, this detection process (code-named by PCGS, the PCGS Coin Sniffer™) will analyze the surfaces of a coin in a matter of seconds to detect foreign substances and provide quantitative information about the coin. (…) © Professional Coin Grading Service (PCGS) for Coin News, 2010. |
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| 2010 American Buffalo Gold Proof Coin Launch Date Officially Announced Posted: 29 May 2010 06:20 AM PDT The United States Mint on Thursday officially announced when the 2010 $50 American Buffalo Gold Proof Coin would launch.
While a price point for the coin is not yet available, the U.S. Mint said in a press statement that the 24-karat gold piece would be released on June 3, 2010, at noon Eastern Time. The date is not a surprise. Earlier this month the Mint revealed the day by adding it to a notification page on its online store. But the press announcement sets its release in virtual stone. Also, it indicated that there would be no household order limits in place. Buyers can order as many as they want. (…) © CoinNews.net for Coin News, 2010. |
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| IAU Thanks Mint for Canadian International Year of Astronomy Coin Posted: 29 May 2010 06:20 AM PDT
In July 2009, the Mint was proud to add its own $30 sterling silver International Year of Astronomy coin to the constellation of numismatic tributes to this global celebration of the field of astronomy. Our collector coin features an observatory surrounded by outer space icons such as a galaxy, a comet and the planet Saturn. (…) © Royal Canadian Mint for Coin News, 2010. |
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| Taibbi’s View of Congress’ Audit the Fed Debate Posted: 29 May 2010 06:00 AM PDT Matt Taibbi's latest piece in Rolling Stone is about how Wall Street's "flooded the Capitol with more than 2,000 paid lobbyists" to fight the Restoring American Financial Stability Act — which even veteran Congress members seem to recognize as a new level for the "intensity of the blitz." Lobbying on behalf the regular folk are the Americans for Financial Reform, which Taibbi describes as a barely year-old organization made up of 60 unpaid volunteers. He divides this war between lobbyists into four fronts: auditing the Fed, protecting consumers, ending "too big to fail," and reining in derivatives. Here is Taibbi's look at front one, auditing the Fed: "…For nearly a century, the Federal Reserve has been, within our borders, a nation unto itself – with vast powers to shape the economy and no real limits to its authority beyond the president's ability to appoint its chairman. In the bubble era it has been transformed into a kind of automatic bailout mechanism, helping Wall Street drink itself sober by flooding big banks with cheap money after the collapse of each speculative boom. "But suddenly, with both the Huffington Post crowd and the Tea Party raising their pitchforks in outrage, [Vermont Sen. Bernie] Sanders managed to pass – by a vote of 96-0 – an amendment to force the Fed to open its books to congressional scrutiny. "If Alan Greenspan and Ben Bernanke don't take that 96-0 vote as a kick-to-the-groin testament to the staggering unpopularity of the Fed, they should. When 96 senators agree on something, they're usually affirming their devotion to the flag or commemorating the death of Mother Teresa. But as it turns out, the more than $2 trillion in loans that the Fed handed out in secret after the 2008 meltdown is something that both the left and the right have no problem banding together to piss on. "One of the most bizarre alliances of the bailout era took place when Sanders, a democratic socialist, and Sen. Jim DeMint, a hardcore conservative from South Carolina, went on the CNBC show hosted by crazy supply-sider Larry Kudlow – and all three found themselves in complete agreement on the need to force Fed loans into the open. "People who come from very different places agree that it ought not to be done in secret, that the Fed isn't Skull and Bones," says Michael Briggs, an aide to Sanders. "The Sanders amendment, if it survives in conference, will lead to some delicious disclosures. Almost exactly a year ago, Sanders questioned Bernanke at a Senate-budget hearing, asking him to name the banks that had been bailed out by the Fed. "Will you tell the American people to whom you lent 2.2 trillion of their dollars?" Sanders demanded. After a little hemming and hawing, a bored-looking Bernanke – Time magazine's 2009 Person of the Year, by the way – bluntly said, "No." It would be "counterproductive," he explained, if clients and investors learned that these poor banks were broke enough to need a public handout. "Bernanke's performance that day so rankled Sanders that he wrote up his amendment specifically to bring the Fed's goblin-in-chief to heel." Taibbi also briefly mentions the Fed audit version put forward by "libertarian hero" Ron Paul to permanently open the Fed's activity to Congressional scrutiny. However, he explains Obama was against that version from the beginning because it could open the Fed up to too much day-to-day involvement from Congress. Instead the amendment has ended up a "one-time shot" where Congress can only look at the Fed loans from after December 2007 once, and afterward the books will be again closed forever. You can read the entire article on Rolling Stone, which covers Wall Street's war in Congress. Best, Rocky Vega, Taibbi's View of Congress' Audit the Fed Debate 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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| Dow, gold will converge but not by decimating Dow, Lassonde says Posted: 29 May 2010 04:57 AM PDT 12:52p ET Saturday, May 29, 2010 Dear Friend of GATA and Gold: Franco-Nevada Chairman Pierre Lassonde today concludes his two-part interview with Eric King of King World News, predicting that the gold price and the price of the Dow Jones Industrial Average will converge but not by a decimation of the Dow. The second part of the interview is about 17 minutes long and you can find it at the King World News Internet site 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 will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. 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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| British investors scramble for gold coins to beat tax increase Posted: 29 May 2010 04:23 AM PDT By Javier Blas and Vanessa Houlder http://www.ft.com/cms/s/0/74825c32-6a93-11df-b282-00144feab49a.html British investors are scrambling to buy sovereigns and Britannia gold coins in an attempt to use a tax loophole to avoid paying more capital gains tax. Mark O'Byrne, of Gold Core, a London-based gold coins and small bars dealer, said it was selling sovereigns and Britannias "in the thousands." "This week we sold more than in any other one-week period," he said. "The vast majority of the buying is related to capital gains tax." The move comes as the government plans to raise CGT for items such as second homes and shares to rates "similar or close to those applied to income," suggesting a rise from the current 18 per cent rate to nearer 40 or 50 per cent. The tax increase is likely to come into force next April but could be introduced on June 22 alongside the government's planned emergency budget. 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 will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php UK-minted bullion coins are exempt from CGT as they are considered legal tender. Some investors are choosing to buy gold coins instead of other assets that would incur CGT. Revenue & Customs says "sovereigns minted in 1837 and later years and Britannia gold coins are currency but, like all sterling currency, are exempt." Coins that are currency but not sterling, such as South African krugerrands, are subject to CGT, the Revenue says. Dealers said the rush by UK-based investors had pushed the premium of both coins above the spot gold price to about 7-8 per cent, up from 3.5 per cent at the beginning of May. Spot gold in London traded on Friday at $1,215 a troy ounce, just below the nominal all-time high of $1,248.95 set this month. The proposal to raise CGT was a concession to the Liberal Democrats after the Conservatives fell short of an overall majority in this month's general election. The plan has met with opposition from the Tory right. The Con-Lib coalition believes it will curb tax avoidance by people treating income as capital gains and will raise money to help fund a rise in income tax thresholds for low and middle earners. Other countries have seen a rush into gold coins this month. After the E750 billion (L638 billion) eurozone bailout, German investors bought the most coins since the collapse of Lehman Brothers in 2008. The US Mint, which produces one the most popular gold coins, has sold 184,000 one-ounce American Eagles so far this month, the most since January 1999. 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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| Federal Government Wont Enforce Bank Laws Posted: 29 May 2010 04:07 AM PDT (Snippets, Long Article) Did you know that Bank of America, J.P. Morgan Chase, and Wells Fargo are currently in violation of federal banking law, but the government won't enforce that law? The law in question is the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994, passed by a Democratic Congress and signed by a Democratic President. Prior to passage of this act, banks were restricted from operating widespread, multi-state branching networks. Plus, many states had their own restrictions on banks. These restrictions dated all the way back to the National Bank Act of 1864. The result was a nation full of relatively small banks. The idea was that competitive equality was good for the industry. Local banks invested their money locally, while large banks drained funds from rural areas and directed them to large cities. (more) One of the primary means for Wall Street banks to bring in revenue these days is charging fees for pretty much everything. They will haul in 38 Billion dollars on overdraft fees this year, with a median APR of 4,547%. That's enough to make a loan shark blush. They will rake in another $48 Billion from credit card swipe fees. The best example of predation by the banks is in the form of payday loans. The major banks have always been silent owners behind this loan shark filth that suck the life blood out of the poorest, but lately they have come out into the open. A few of the nation's largest banks -- including Minneapolis-based U.S. Bancorp, Wells Fargo & Co. of San Francisco, and Fifth Third Bancorp of Cincinnati -- are now marketing payday loan-type products, with triple-digit interest rates, to their checking account customers.  The law in question was the Depository Institution Deregulation and Monetary Control Act of 1980. William Greider explained in his book Secrets of the Temple, "Passage of the Monetary Control Act had very little to do with how effectively the Federal Reserve could control the supply of money. It's purpose was to protect the Federal Reserve's political base." The law did a lot of things such as requiring banks to operate under the Federal Reserve umbrella (commercial banks were leaving the Fed at the time), gave banks more opportunities to merge and consolidate, raised deposit insurance levels, and, oh yeah, allowed S&L's to speculate in commercial real estate. But it also did one other thing that seems very relevant today. Eliminates State mortgage usury ceilings and restrictions on discount points, finance charges and other charges...The most important part of the Glass-Steagall regulation of the New Deal was Regulation Q. This law regulated the amount of interest and fees that banks could charge for over 47 years. The Monetary Control Act gutted Regulation Q, and all state usury laws were unilaterally suspended. The law was a political trade-off. The Federal Reserve became stronger at the banks expense, but the banks endorsed the law because they got the most prized gift of all - a free pass to prey on the most vulnerable in American society, and they got a multi-billion dollar tax cut to boot. It seems rather ironic that the give-aways to the wealthy that Reagan and the Republicans of the 1980's were famous for started entirely with the Democrats. "I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010. I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness." - - Senator Byron L. Dorgan, Democrat of North Dakota, 1999 "The concerns that we will have a meltdown like 1929 are dramatically overblown." - Senator Bob Kerrey, Democrat of Nebraska, 1999 Much ink has been spilled over the demise of Glass-Steagall in 1999. In fact many of the ills that plague the financial world today go back further and are not being discussed today. Reviving Regulation Q would be the most moral and Christian act we could do today, but it is not being discussed. Rolling back the Riegle-Neal Act would permanently fix the problem of banks being "Too Big To Fail", and thus saving the taxpayer of ever having to do another disastrous bailout of these crooks. In the meantime, even before any reforms are voted on, it would be nice if the government would simply enforce the laws already in place, such as the 10 percent cap rule. More Here.. 
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| Posted: 29 May 2010 04:00 AM PDT BIG PICTURE – Let's face it; central banks are blowing another asset bubble. As if two burst bubbles in the prior decade are not enough, the money maestros have decided to fuel another speculative orgy. Let there be no doubt, both the technology and real estate bubbles were spawned by cheap credit and it is now clear that the central banks have learned nothing from those two episodes. Despite the fact that near-zero interest-rates caused the previous mishaps, the central banks are (once again) pursuing a suicidal monetary policy. By keeping interest-rates well below the rate of inflation, the officials are encouraging speculation, thereby sowing the seeds of yet another asset bubble. At present, the yield curve is steep in most nations and the cost of borrowing is low, so is it any surprise that asset markets are rallying? All over the world, asset prices are inflating again and dangerous excesses are around the corner. Only this time around, the public sector in the West is already over-leveraged and when the next asset bubble bursts, governments will not be able to come to the rescue. Today, most of the developed world is drowning in debt and various industrialised nations face severe deficits. Moreover, these over-indebted economies are struggling to grow, therefore it is highly unlikely that their stock markets will provide leadership.
Now, given the fact that the developing world is growing much more rapidly, it is highly probable that the emerging market equities will benefit the most from asset inflation. Apart from sporting superior growth rates, it is worth noting that the developing nations have relatively low debt levels. It is our contention that this combination of strong economic growth and compressed leverage will be sure to catch investors' attention. The next chart highlights the huge discrepancy between the fiscal health of the industrialised and developing nations. As you can see, public debt relative to the economy is already very high and likely to surge in the developed world, whereas this ratio is expected to decline in the developing world. Therefore, over the next decade, we can expect more and more investors to shift their capital from the debt plagued developed nations to the healthy developing economies.
Historically, the developing markets have traded at a valuation discount when compared the developed markets. However, over the coming years, we suspect that the 'risky' developing markets will command a valuation premium relative to the industrialised world. Put simply, when you factor future earnings growth and an expansion in valuations, the developing markets are prime candidates for the next asset bubble. Since the turn of the millennium, we have favoured the developing countries in Asia and we continue to like China, India and Vietnam. In our view, these economies will prosper for different reasons and their stock markets will reward long-term investors. Now, there can be no doubt that both China and Vietnam have been disappointing over the past few months, but we view the ongoing consolidation as a fabulous buying opportunity. In addition to the developing nations in Asia, we believe the energy sector is also a worthy candidate for the next asset bubble. In fact, when the realities of 'Peak Oil' dawn in investors' minds, we could witness an outright mania in conventional and alternative energy stocks. Although we recognise that the developed world faces some serious economic problems, we are positive about asset prices for the next 2-3 years. In our view, monetary policy determines the fate of every asset-class and as long as interest-rates are low, the ongoing bull-market should continue. In fact, history has clearly shown that each bear-market in the past was preceded by a period of significant monetary tightening. In every previous bull-market, rising interest-rates was the straw which broke the camel's back. Finally, the last chart shows the Fed Funds Rate since 1998 and plots the two most recent US recessions (pink shaded areas on the chart). As you can see, prior to the 2001 recession, the Fed Funds Rate peaked in mid-2000 and it is this monetary tightening which caused the NASDAQ-bust and the 2000-2003 bear-market. Furthermore, prior to the most recent recession, the Fed Funds Rate peaked in mid-2007 and this monetary tightening was responsible for the credit-bust and the 2007-2009 bear-market. At present, the Fed Funds Rate is extremely low and if the economic recovery remains intact, then over the following months, interest-rates will rise. In our opinion, the next bear-market will only occur when the Federal Reserve is done raising its benchmark rate for this cycle. Now, given the precarious state of the US economy, we suspect that the Federal Reserve will increase interest-rates in baby-steps and the next monetary tightening cycle should last for at least 2-3 years. If our guesstimate turns out to be correct, the next significant correction in asset prices will occur around 2012-2013 and until then, we intend to enjoy the benefits of cheap money.
Now, before you get excited, we want to caution you that the next bear-market has the potential to be as equally traumatising as the previous one. Remember, when the bear returns in 2-3 years time, governments in the West will be unable to provide more 'stimulus'. By then, their balance-sheets will be in a terrible state and during the next bear-market, sovereign default risk will be the Achilles Heel. So, in the next bear-market, instead of financial institutions going bust, entire nations are likely to default. Given the ominous scenario outlined above, we want to re-iterate that we have no intention of suffering during the next bear-market. Accordingly, we will endeavour to re-position our clients' capital towards the end of this bull-market, so that we are able to preserve our gains over the full business cycle. If our assessment is correct, towards the end of this bull-market, we are likely to see the following red flags:
When the above warning lights start to flash in tandem, the next recession/bear-market will be around the corner and we will switch from 'capital growth' to 'capital preservation' mode. However, as we have explained above, this bull-market should continue for the next 2-3 years and as long as the primary trend is up, we will remain fully invested in our preferred growth-producing assets. Puru Saxena Blowing Bubbles 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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