Gold World News Flash |
- Why is China promoting Gold Investments, if the Yuan is going to appreciate?
- On Short and Long Term Debts and Deficits
- Saturday Economic Musings
- Jim?s Mailbox
- In The News Today
- Japan PM warns of Greece-like debt crisis
- The Frog in the Frying Pan
- Compendium 3 Available Monday!
- Iran said to be selling euros to buy dollars and gold
- 3 Key Drivers for Stocks, Commodities, Forex, June 13 - 18, 2010: Outlook Remains Bearish
- Wild Weekly Wrap Up: All Our Bullish Ducks in a Row
- International Forecaster June 2010 (#4) - Gold, Silver, Economy + More
- Is There Really A Debt Crisis?
- Cantor Fitz’ Howard Lutnick Gets Kicked in the Nuts
- Add Timberline Resources to the Radar Screen Pronto
- Debt Liquidation and Economic Recovery
- Got Gold Report - COT Flash June 12
- NY Times - Uncertainty Restores Glitter to an Old Refuge, Gold
- Visualizing The Numbers Behind The World Cup
- Soros: The Collapse of the Financial System As We Know it is Real
- BP As Schrodinger's Cat: Simmons Upgrades Firm To Buy, Seeing It As Both Bankrupt And With $52 Stock Price At Same Time
- Banks set new store on building gold vaults
- Bernanke Says Fed Does Not Engage In Stock Market Or "Individual Stock" Manipulation; Some Loose Ends On FX Swaps
- Mass Country Wide Closing and Layoffs
- Worried about their dollars, more are turning to gold
- CFTC's energy industry gadfly gets his way
- CFTC's energy industry gadfly gets his way
- Comex may be losing influence over metal prices, Butler tells King World News
- Jim's Mailbox
- International Forecaster June 2010 (#4) – Gold, Silver, Economy + More
- Our Short Sale Offer – One Month Later
- China Downplays Role of Gold in its Forex Holdings
- Gold Investment in China
- "Always Start with Gold Bullion"
- "Always Start with Gold Bullion"
- Silver Weekly Prices Advance 5.4% in US, 3.1% London
- Bullion Prices & Business Weekend Recap – June 12, 2010
- Ferdinand Lips Institute preserves gold advocate’s work on the Internet
- John Embry: 17 reasons to own gold
| Why is China promoting Gold Investments, if the Yuan is going to appreciate? Posted: 13 Jun 2010 01:00 PM PDT The Chinese government is encouraging investments in gold and is working to expand the range of gold investments there. But the U.S. and others believe that the Yuan is going to appreciate. Surely the Chinese investor will be hurt if this happens?
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| On Short and Long Term Debts and Deficits Posted: 12 Jun 2010 07:18 PM PDT Brad DeLong submits: Henry Blodget asks a question (Buzzup Finance - Our Questions For Paul Krugman, Brad DeLong, Niall Ferguson, And The Tea Party):
Complete Story »
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| Posted: 12 Jun 2010 07:03 PM PDT Market Ticker - Karl Denninger View original article June 12, 2010 11:04 AM The dichotomy of the following two pieces is rather sobering, when one considers the implications. First, from George Soros: [INDENT]"The collapse of the financial system as we know it is real, and the crisis is far from over," Soros said today at a conference in Vienna. "Indeed, we have just entered Act II of the drama." Soros, 79, said the current situation in the world economy is "eerily" reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak. [/INDENT]That, of course, is because the original medicine was incorrect. The entire financial world, including Soros, advocated for (and got) more Keynesian stimulus - that is, more debt applies to an over-levered debt-laden world. Indeed, as the below shows, the fundamental instability here is not one of excess capacity, it is one of excess debt - an excess that has built...
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| Posted: 12 Jun 2010 07:03 PM PDT View the original post at jsmineset.com... June 12, 2010 10:00 AM Jim, Home foreclosures are up 44% in May with a prediction that another 5 million delinquent mortgages may end in foreclosure. These numbers are staggering but I haven’t heard them discussed in the nightly news. MOPE is still the order of the day. Best regards, CIGA Black Swan U.S. Home Foreclosures Climb 44% to Record in May (Update1) June 10, 2010, 2:06 PM EDT By Dan Levy June 10 (Bloomberg) — U.S. home foreclosures reached a record for the second consecutive month in May, with increases in every state, as lenders stepped up property seizures, according to RealtyTrac Inc. Bank repossessions climbed 44 percent from May 2009 to 93,777, the Irvine, California-based data company said today in a statement. Foreclosure filings, including default and auction notices, rose about 1 percent to 322,920. One out of every 400 U.S. households received a filing. "We're nowhere near out of the woods,"...
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| Posted: 12 Jun 2010 07:03 PM PDT View the original post at jsmineset.com... June 12, 2010 10:01 AM Dear CIGAs, I will save you from having to read another missive, or for that matter from having any further questions. "QE to Infinity" by any means possible, directly or covertly. Jim Sinclair's Commentary China bashers take note. China May Foreign Investment Rises for 10th Month (Update2) By Bloomberg News June 12 (Bloomberg) — Foreign direct investment in China rose for a 10th month in May, adding to evidence that the nation is weathering the European debt crisis. Investment rose 27.5 percent to $8.13 billion, the Ministry of Commerce said in a statement today. That was more than the 23.2 percent median forecast of four economists surveyed by Bloomberg News. Foreign investment in the first five months of the year rose 14.3 percent to $38.9 billion, the ministry said. China’s economy will expand by 9.5 percent this year, three times the pace of the U.S, the World Bank forecast this week. C...
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| Japan PM warns of Greece-like debt crisis Posted: 12 Jun 2010 07:03 PM PDT There was no gold price activity worthy of the name during all of Far East and half of London trading on Friday. But, at 1:00 p.m. in London [8:00 a.m. Eastern time]... just a few moments before the Comex opened in New York... gold caught a bit of a bid and rallied about $9 in an hour, before giving back every dollar of that gain going into the London p.m. gold fix at 10:00 a.m. Eastern time... 3:00 p.m. in London. From the 10:00 a.m. low, gold rallied about $11 to its high of the day [$1,231.80 spot] around 2:30 p.m. Eastern time, before selling off a few dollars into the close of electronic trading at 5:15 p.m. in New York. Not that I wish to appear overly suspicious, dear reader, but did you notice that fact that gold hit its high price of the day about the same moment that the Dow had another 'magic rally' out of negative territory? Maybe I'm just imagining things. Similar to gold's rally, silver began a rally about 11:30 a.m. in London... and this contin...
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| Posted: 12 Jun 2010 07:03 PM PDT The Frog in the Frying Pan Three Structural Changes The Economy Won't Produce Enough Jobs The End Game Like an Army But with No Discipline Tonight I am in Venice, but I have arranged for a special edition of Thoughts from the Frontline, written by Jonathan Tepper of Variant Perception, a research firm in London. I have been corresponding with Jonathan for some time, and we have had some solid, and lately quite frequent, conversations. I am very impressed with this young man, whose perceptions and insights I find quite thoughtful. We are working hard together to finish a book that will be called The End Game, which we hope to have out this fall. It deals with the end of the debt supercycle in the developed world and the consequences for economies around the globe. Depending on where you live, the investment implications can be very different. The book will be very global in scope, and our intention is to make it so simple even a politician can understand. In ...
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| Compendium 3 Available Monday! Posted: 12 Jun 2010 07:03 PM PDT View the original post at jsmineset.com... June 11, 2010 01:43 PM Dear CIGAs, We are happy to announce the release of our third Compendium, available this coming Monday. As many of you know, Compendium sales help us keep the site free for you to enjoy without the clutter of advertisements. If you find JSMineset useful, please purchase a copy. Included in this two DVD set is a DVD Rom (accessible by computer DVD drive only) that is a searchable database of nearly two thousand articles over the last two years from Jim Sinclair, Trader Dan, Monty Guild and a collection of other JSMineset contributors. This is one of the largest collections of articles related to the Gold market available today on DVD and includes all charts we have posted over the last year and a half. The second DVD is the much anticipated CIGA Meeting in Toronto from February 2010. This DVD includes over 3 hours of discussions with Jim Sinclair himself and is playable in any DVD player. Compendium 3 will be availa...
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| Iran said to be selling euros to buy dollars and gold Posted: 12 Jun 2010 07:02 PM PDT By Michael Wei and Simon Rabinovitch http://www.reuters.com/article/idUSLDE65111120100602?type=marketsNews The Iranian central bank has announced that it will sell 45 billion euros from its foreign exchange reserves to buy dollars and gold, China's official Xinhua news agency reported on Wednesday, citing unspecified Iranian media reports. Xinhua said that the sales would be conducted in three stages and that the first had already begun, citing unnamed sources. It also said that other Gulf states had also started cutting their euro holdings. 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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| 3 Key Drivers for Stocks, Commodities, Forex, June 13 - 18, 2010: Outlook Remains Bearish Posted: 12 Jun 2010 07:01 PM PDT Cliff Wachtel submits:
Primary market moving events included:
Implications for the Coming Week: No change, outlook remains bearish Complete Story »
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| Wild Weekly Wrap Up: All Our Bullish Ducks in a Row Posted: 12 Jun 2010 07:00 PM PDT  Phil Davis submits:
Last week, I felt like I was going to have to call Animal Control to help me fight off the bears. As I mentioned in last week’s Wrap-Up, all 14 misses (out of 55 trade ideas for the week) we had were bullish plays that we were grabbing on the way down. On Friday we went bullish on USO, SSO, DIA, TBT (well, we’re always bullish on TBT), Aetna (AET), Barrick Gold (ABX), Copper Futures and even poor BP (BP). Those followed up on bullish plays we had taken on Thursday on Tessera (TSRA), USO, Massey Energy (MEE), Freeport-McMoRan (FCX), EEM, ERX and Exxon (XOM). Complete Story »
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| International Forecaster June 2010 (#4) - Gold, Silver, Economy + More Posted: 12 Jun 2010 07:00 PM PDT As we have noted before the rage of 1789 in France cost the heads of 300,000 tormentors out of 30 million Frenchmen. The question that presents itself is will something like this occur again in our times.
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| Is There Really A Debt Crisis? Posted: 12 Jun 2010 06:41 PM PDT
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| Cantor Fitz’ Howard Lutnick Gets Kicked in the Nuts Posted: 12 Jun 2010 06:33 PM PDT Our tireless effort to stop Howard Lutnick, the venal and shameless CEO of Cantor Fitzgerald from launching his ill-conceived variant of box office futures contracts is gaining strength. The CFTC and MPAA were made aware of the pernicious conflicts of interest between Cantor and Hollywood insiders – a relationship that The Hollywood Reporter has done their best to cover up – but online publishers like Slate have worked tirelessly to expose – has tipped the balance in favor of reason. Too bad the CFTC is not equally robust in stopping market rigging in the silver futures markets. PirateMyfilm If anyone wants to submit a micro-budget $500 film idea to Pirate Myfilm; locals in the Gulf Coast region who can get behind BP's thugs and record what's going on I will be buying 100% of these shares and posting these films on MaxKeiser.com and possibly show clips on RT's "Keiser Report." List your projects and the usual review by PMF members who can rate the projects applies. The PMF Fund must give the project the Green Light before funds are released to the film maker. I think films that are 10 minutes in length are OK.
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| Add Timberline Resources to the Radar Screen Pronto Posted: 12 Jun 2010 06:12 PM PDT It is often said that the best place to find a gold mine is … at a gold mine. That is exactly what Timberline Resources (AMEX:TLR; TSX:TBR.V) did and exactly why they, along with Ron Guill's Small Mine Development (SMD) are in the process of blasting and digging a pretty big tunnel into a mountain side in southwestern Montana right now in the summer of 2010.
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| Debt Liquidation and Economic Recovery Posted: 12 Jun 2010 06:11 PM PDT In order to accurately appraise the status of the much-touted "global economic recovery" we are supposedly experiencing today it is vitally important to clearly and correctly understand the relationship between debt liquidation and economic recovery.
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| Got Gold Report - COT Flash June 12 Posted: 12 Jun 2010 06:04 PM PDT Bottom line: COT report reveals huge divergence between classes of COMEX commercial traders. Producer/Merchants near record net short gold while Swap Dealers unwilling to add to net short positioning. Gold +1.2% and the gold LCNS +2.2%. Silver -0.8% and the silver LCNS near flat at +0.2%.
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| NY Times - Uncertainty Restores Glitter to an Old Refuge, Gold Posted: 12 Jun 2010 05:09 PM PDT Uncertainty Restores Glitter to an Old Refuge, Gold By NELSON D. SCHWARTZ Published: June 12, 2010 It is the resurgent passion of the doomsday crowd, a bet that everything will go wrong. No matter what has you worried, they say, the answer is gold. Inflation, deflation, government borrowing or the plunging euro — you name it — the specter of these concerns has set off a dash to gold, driving the precious metal to new highs and illustrating how fears of economic turmoil have moved from the fringe to the mainstream. And gold bugs, often dismissed as crackpots who hoard gold bars in the basement, are finally having their day. "I just think you're in a world where a lot of chickens are coming home to roost," said John Hathaway, manager of the Tocqueville Gold fund. "Gold is an escape hatch." The most visible new gold enthusiasts range from the Fox News commentator Glenn Beck on the right to the financier George Soros on the left, with even some sober-minded Wall Street types developing a case of gold fever. While their language may differ, they share a fundamental view that the age-old refuge of gold is relevant again, especially as other assets like stocks and national currencies show signs of weakness. Now, individual investors are following their example around the world. The United States Mint is running short of gold coins, and the South African mint increased Krugerrand production by 50 percent late last month, to its highest level in 25 years, on brisk European demand. The debt crisis in Europe and the ensuing drop in the value of the euro are the most recent catalysts for gold's spike last week to $1,254 an ounce, a record before adjusting for inflation, but the deeper concern is that even in the United States, government borrowing is unsustainable and the day of reckoning is at hand. Sales of American Eagle one-ounce gold coins tripled in May from the month before. If governments print more money to pay off their debts, the logic goes, inflation will destroy the value of the dollar, the euro and other paper currencies — thus enhancing the value of gold. What is more, with tax increases unlikely and with Europe on the brink, the unthinkable — a sovereign debt default or the collapse of the credit system — has suddenly become thinkable. To be sure, gold buyers have always been motivated by fear. What has changed is that some of the most respected investors on Wall Street are now among the fearful. "In recent years, we have gone from one bubble and bailout to the next," David Einhorn, a New York money manager who was among the first to foretell the failure of Lehman Brothers, said in a speech last month. "Our gold position reflects our concern that our fiscal and monetary policies are not sufficiently geared toward heading off a possible crisis." Since ancient times, gold has been deemed intrinsically valuable, holding its worth even as governments fell and currencies collapsed, while seemingly casting a spell on its owners. Still, gold can go down — sometimes sharply. After peaking in 1980 at more than $800 an ounce, gold sank over the next two decades, bottoming out at just over $250 an ounce in 1999. But unlike paper assets that can become worthless, gold always retains at least some value. These days, gold is also something of a political Rorschach test. On conservative talk radio, opposition to the Obama administration's economic policies and warnings that huge budget deficits will set off runaway inflation have made gold a hot topic of on-air discussion — and lured gold companies as advertisers. Tongue only half in cheek, Glenn Beck advised his audience to consider "Gold, God and Guns," while laying out three possible scenarios for the economy: recession, depression or collapse. One major advertiser on Mr. Beck's show is Goldline, a huge California marketer of gold coins and bars that is also a sponsor of programs hosted by other prominent conservative commentators like Laura Ingraham and Mike Huckabee. Mr. Beck has said he "was a client of Goldline long before they were a client of mine," adding: "I personally don't buy gold as an investment. I buy it for protection." Of course, the right hardly has a monopoly on gold. Mr. Soros, a prominent donor to liberal causes and candidates, holds more than $600 million in bullion and gold mining shares. Even as worries about the global economy have intensified, gold has become easier to buy. Although some people still regard bars of gold in a vault as the ultimate insurance policy, exchange-traded funds, or E.T.F.'s, that hold gold have exploded in popularity in recent years. Gold E.T.F.'s, which trade like stocks but track the price of physical gold, account for 1,856 tons of gold, up from less than 500 tons in 2005, according to Credit Suisse. Besides luring individual investors, these funds have also made gold more appealing to hedge funds and other institutions, allowing them to own vast amounts of gold without the burden of having to store it. John A. Paulson, a top New York hedge fund manager who earned billions betting against subprime mortgages, holds $3 billion worth of gold E.T.F.'s, making gold the largest single position in his $35 billion portfolio. Daniel J. Arbess, who manages more than $2 billion in Perella Weinberg's Xerion fund, is another new gold lover. A few years ago, he said, he would not have taken a second look at gold as an investment. But now Mr. Arbess, a Harvard Law graduate and a generally conservative investor, is very serious about gold. Spiraling deficits in the United States, Japan and Britain are unsustainable, he said, and could eventually hurt confidence in what are called "fiat currencies" — paper money not backed by gold, including the United States dollar. "Indebted countries may soon be forced to choose among three politically difficult alternatives: sharp cuts in expenditures, debt default or printing money to pay off debt," he said, with the last option the most likely outcome. Gold, he said, is a logical hedge against this risk, because firing up the printing presses ignites inflation. True believers note that gold has risen in each of the last nine years, and that while the Standard & Poor's 500-stock index is down 13 percent since 2001, gold is now worth nearly five times what it was then. For all its newfound respectability, gold still manages to bring out the inner survivalist in its adherents. Gold bugs like Peter Schiff of the investment firm Euro Pacific Capital in Westport, Conn., envision a black market arising in the United States, with merchants refusing paper money and insisting on gold instead, while Mr. Hathaway, the gold fund manager, says the credit system has entered "the end game." "People probably still think I'm nuts," Mr. Hathaway said. "But I'm not talking to myself in an isolation chamber anymore. We've got company now."
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| Visualizing The Numbers Behind The World Cup Posted: 12 Jun 2010 01:48 PM PDT
A quick look at the "math" behind the spectacle that will consume over 25 billion people for the next thirty days courtesy of mintlife. On June 11, nearly 100,000 soccer fans from around the world will gather at Soccer City stadium in Johannesburg to watch the opening game of the 2010 World Cup. Millions more will tune in their television sets at home. During the four weeks to follow, the world’s eyes and ears will be directed towards South Africa, following one of the world’s premier sporting events. Soccer may not be overwhelmingly popular in the United States, but on a global scale, the World Cup is the largest sporting event in terms of viewership. Collectively, more than 26 billion viewers watched the games of the 2006 FIFA World Cup in Germany: 24.2 billion at home and 2.1 billion out of home.
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| Soros: The Collapse of the Financial System As We Know it is Real Posted: 12 Jun 2010 01:17 PM PDT Love or hate his politics, there is no doubt George Soros is one of the brightest investment minds of the past few generations. Hence, when you have Soros on one side saying we have only begun the second stage of the financial crisis, and on the other hand you have "Unicorns and Butterflies" Bernanke telling us all is well (kumbaya!) [coming off one of the worst economic forecasting records the past half decade], you can guess which side one might be better off listening to.
NYTimes DealBook has a full transcript of the speech Soros gave at the Institute of International Finance in Vienna. Remember, you can choose to accept the red pill or the blue pill. If you choose the blue pill, Ben Bernanke has solved all your ills... if you choose the red, please read on for some excerpts.
Obviously, the big fear here is what Nassim Taleb described yesterday: one day we wake up to a failed bond auction. I mean how much money is there in the world? China only has $2 Trillion in reserves and can't buy everyone's debt. And for all we know central banks are already doing bidding behind the primary dealers to make everything appear rosy. Without audits we know nothing. 
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| Posted: 12 Jun 2010 01:15 PM PDT
Ever wonder who may have been buying up every share of BP stock earlier this week, especially when it plunged to 14 year lows on June 9 amid media frenzy based on a Fortune story in which Simmons & Co.'s CEO Matt Simmons was quoted as saying that BP "has about a month before they declare Chapter 11." Why, Simmons & Co. itself, of course. In a note released to clients on Friday, Simmons & Co, upgraded BP from Neutral to Overweight, in which Mr. Simmons amusingly notes, "the kitchen sink of headlines have been thrown at BP shares over the past 2 weeks, thereby partially desensitizing the shares to the news." With his dire warnings of an imminent bankruptcy just two days prior to the upgrade, Mr. Simmons surely did his fair share to contribute to kitchen sink. It is only fair that after creating a near-panic in the name, that the firm would now suddenly be stuck in a Schrodinger's Cat world, in which BP is seen as both bankrupt, and having a $52 price target at the same time. While we don't know if Simmons & Co. trades on a prop basis, and actually accumulates its own trading positions, the firm does disclose it has a Sales and Trading operation, which likely means that it does dabble in stocks for its own account. Reading the report does not help: the only relevant disclosure in Robert Kessler research piece is that "Simmons & Company International may seek compensation for investment banking services from BP p.l.c. and other companies for which research coverage is provided." While we wish the firm lots of luck in being picked as an advisor ever again by BP in this particular universe, we do wonder, and assuming the investment bank does not transact on its own account, just what other Simmons clients may have been axed in the stock, and had an interest in seeing a plunge in the stock, only to see the firm responsible for the 14 year low turn around 48 hour laters and issue a $52 price target on a company that according to the big boss himself, was supposed to be declaring Chapter 11 by mid-July. As we noted on Wednesday, "all this media rumormongering should certainly be taken with a blob of oil." Little did we know how bad it really was. Next up: we expect a consortium of banks led by Goldman to LBO all the offshore oil drillers imminently. Full Simmons report:
This posting includes an audio/video/photo media file: Download Now | ||||
| Banks set new store on building gold vaults Posted: 12 Jun 2010 12:48 PM PDT By Javier Blas http://www.ft.com/cms/s/0/53163d56-7584-11df-86c4-00144feabdc0.html Some of the world's biggest banks and security companies are building vaults to store gold bars and coins worth tens of billions of dollars, cashing in on resurgent demand and record prices. The growing interest in gold among investors worried about the global economy and Europe's sovereign debt crisis has led to a shortage of long-term storage space. Bankers said that vaulting had become highly profitable. Rising bullion prices translate into higher storage fees, which are usually calculated as a percentage of the gold price. Gold prices this week rose to a nominal record of $1,251.20 a troy ounce, up 14.5 per cent since January. On Friday bullion traded at $1,226. 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 "Physical gold is being sought more than ever and that is causing all sorts of strains," said Peter Hambro, chairman of Petropavlovsk, the gold miner. Much of the increased demand comes from exchange-traded funds. The world's largest, the SPDR Gold Trust, was on Friday holding a record 42 million ounces of gold worth $51.5 billion at current prices. While some banks said they had space, others said their vaults were nearly full. Several said they were building or planning new vaults. JPMorgan recently opened a new gold vault in Singapore and Via Mat International, the Swiss-based security company, has just opened a silver safe warehouse in west London. Deutsche Bank is mulling a new vault, bankers said. Frank Ziegler, head of precious metals at BayernLB in Germany, said its vault was full. "We are discussing increasing the size. We are just at the planning phase," he said. Roger Jones, global head of commodities at Barclays Capital in London, said the bank was "actively looking at the precious metal vaulting business." While the traditional image of a bank vault is a basement deep underground, modern vaults are purpose-built warehouses, above ground and surrounded by high security. The trend to build new vaults reverses the dismantling in the early 1990s of the elaborate -- and expensive -- infrastructure of vaults put in place during the last gold boom of the late 1970s. Philip Klapwijk of GFMS, the precious metals consultancy, said the move to build vaults reflected the "new nature" of the gold market. Investors hoping to benefit from a rising gold price and who are driving demand want long-term storage. Jewellery makers deposit gold for short periods. 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:
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| Posted: 12 Jun 2010 12:27 PM PDT
In a response letter sent to Alan Grayson, the Fed chairman has the following brief retort to the question of whether "the Federal Reserve- alone or in concert with the Treasury Department or any part of the government- ever taken any action with the purpose or effect of supporting the stock market or an individual stock": "The Federal Reserve has not intervened to support the stock market or an individual stock." Shocking. And we are confident that the fine people at Liberty 33 just sit all day, twiddling their thumbs now that the Fed is no longer in the MBS and UST monetization business. Furthermore, anyone who reads anything into the fact that the FRBNY is continuously ramping up its hiring of traders, both credit and equity, as posted in assorted public venues, is simply paranoid and does not understand that this is only due to Brian Sack's fascination in being surrounded by 400 traders daily. On the other hand, at this point pretty much everyone is aware of the sad state of FRBNY intervention, whether it is in the FX market or the gold market, and indirectly via the discount window and the repo system, in which banks purchase bonds at auction, using discount window or other zero cost capital, only to repo it back, and to use the proceeds to bid up stocks. Maybe Mr. Grayson can ask the Chairman whether the Fed is actively endorsing primary dealers to bid up risky assets to create the impression that since the market is ramping higher (on no volume, mind you, but who cares) that the economy is doing so as well (we will shortly have something to say that refutes this thesis, compliments of none other than Goldman Sachs). All cynicism aside, Grayson at least still continues to ask the right questions: among these are 1) How does the fed plan on dealing with the $1.7 trillion in MBS on the Fed's balance sheet, 2) Why Greenspan and Bernanke were so wrong in keeping the FF rate for so long, and how does the Chairman plan to reconcile the same bubble creation that blew up the economy last time ZIRP was around, with the deflationary threat to the economy, 3) Why does the Fed think a Tobin tax is bad (and, incidentally, why does the Fed even have an opinion on tax policy), 4) Why is the Fed failing at pushing unemployment lower even with ZIRP and QE, 5) How the Fed is lobbying on behalf of its, and Wall Street's interest, 6) How much gold should the US government own, and many others. Yet the most interest question in our opinion is whether or not the Fed, via its prior and ongoing liquidity swap operations, is actively pumping dollars into foreign CB at the unwind of a swap that has differing entry and exit cross fixings. This is actually a great question which will demand much more thorough analysis, as during the last liquidity crisis, the Fed pumped over $500 billion in capital in foreign banks at a time when the DXY was at then-all time highs, only to unwind these swaps as the dollar subsequently crashed, resulting in a massive net flow of dollars from the Fed to foreign banks. As such liquidity swaps are far more than mere liquidity backstops - they are yet another shadow mechanism to pump money into foreign CBs. Furthermore, the money outflowing in this manner, far outweighs any interest earnings on swaps, which Bernanke determines amounted to about $2.1 billion in 2009. Another wonderful question to which Bernanke, unless he had completely lost his mind, gives a negative anwer, is whether any foreign banks that were the recipients of FX swaps, used the proceeds to buy US Treasuries. Obviously, Bernanke's answer is no, as this would be yet another shadow monetization process. We do, however, wonder just how Bernanke knows precisely what foreign CBs did with all the excess cash: surely, this money thus created out of the Chairman's printer thin air, is completely fungible, and to say that foreign CBs did not use that money to purchase USTs, would mean that foreign central Banks did not buy USTs at all during the period in question. Bernanke surely sees this problem as in another question he himself notes: "Because money is fungible, in general it is not possible to determine whether a counterparty used funds obtained from loans or through other transactions for a specified purpose. It is not possible to specifically connect the extension of particular loans by the Federa Reserve with the acquisition of US government debt." And herein lies the rub - by outright denying that FX swaps were used to monetize debt, Bernanke may have cornered himself, as the next logical question is just what did foreign CBs buy with any FX lines that were not used up in further downstream liquidity facilitating operations. Does Bernanke in essence say that foreign Central Banks never purchase US Treasuries? That would be an amusing claim, and is certainly refuted by the definition of Indirect Bidders, conveniently provided by the Fed itself. We surely do hope Mr. Grayson will take his line of questioning to the next logical step, which is catching the Chairman in outright lies. At this point, with so many loose ends over at Liberty 33 and the Marriner Eccles building, it is just a matter of time. Full response by Bernanke to Grayson.
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| Mass Country Wide Closing and Layoffs Posted: 12 Jun 2010 09:29 AM PDT Here are closing stores, restaurants, layoffs etc just in the last few days! I'm sure the readers here are familiar with some of these businesses. Click on the links. Comments on "Green Shoots"? Johnnie Walker's Men Store in Milwaukee Wisconsin Pipkin Cameras and Imaging Store in Oklahoma City Allain Gallery in Richmond Virginia Stone's Throw Golf Course in Newton Ill Glacier Ice Arena in Grand Junction Colo. Maumee 18 Theater in Maumee Ohio Eccentrix in Joplin MO The White Pine Copper Refinery 3M to Close Ardmore Plant - 125 Jobs Lost Provincetown High School in Mass. B&G Golf in Brookfield Update: Taylor Sawmill in Enfield ill Pages New and Rare Bookstore Arizona Select Medical Corp Manchester MO Facility - 66 layoffs Caye Upholstery, Closing 2 NC Facilities - 160 Jobs Lost Ripley County Fair NY Blockbuster in Oak Ridge Tenn. The Hubbard BMV in Ohio The Golden Corral Buffet & Grill restaurant on Seminole Trail VA? Update: Ken Lee's Gallery 11 in Steamboat Springs Hillsborough County FL - 200 Brown University Bookstore RI - 8 Lucas County Sheriff's Office OH - 16 La. Department of Education - 31 Exempla Healthcare - 100 Position from Hospitals in Denver Boeing - Lost of Constellation Funding Could = 180 Layoffs City of Romulus - 32 Layoff Notices Burke County Public Schools NC - 70 Middleboro School District - 30 Marian Community Hospital - 26 Cinram - 482 The Siena Hotel Spa Casino in Reno - Eliminating Table Games = 35 Layoffs 
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| Worried about their dollars, more are turning to gold Posted: 12 Jun 2010 09:26 AM PDT By Nelson D. Schwartz http://www.nytimes.com/2010/06/13/business/13gold.html It is the resurgent passion of the doomsday crowd, a bet that everything will go wrong. No matter what has you worried, they say, the answer is gold. Inflation, deflation, government borrowing, or the plunging euro -- you name it -- the specter of these concerns has set off a dash to gold, driving the precious metal to new highs and illustrating how fears of economic turmoil have moved from the fringe to the mainstream. And gold bugs, often dismissed as crackpots who hoard gold bars in the basement, are finally having their day. "I just think you're in a world where a lot of chickens are coming home to roost," said John Hathaway, manager of the Tocqueville Gold fund. "Gold is an escape hatch." 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 The most visible new gold enthusiasts range from the Fox News commentator Glenn Beck on the right to the financier George Soros on the left, with even some sober-minded Wall Street types developing a case of gold fever. While their language may differ, they share a fundamental view that the age-old refuge of gold is relevant again, especially as other assets like stocks and national currencies show signs of weakness. Now individual investors are following their example around the world. The United States Mint is running short of gold coins, and the South African mint increased Krugerrand production by 50 percent late last month, to its highest level in 25 years, on brisk European demand. The debt crisis in Europe and the ensuing drop in the value of the euro are the most recent catalysts for gold's spike last week to $1,254 an ounce, a record before adjusting for inflation, but the deeper concern is that even in the United States, government borrowing is unsustainable and the day of reckoning is at hand. Sales of American Eagle 1-ounce gold coins tripled in May from the month before. If governments print more money to pay off their debts, the logic goes, inflation will destroy the value of the dollar, the euro, and other paper currencies -- thus enhancing the value of gold. What is more, with tax increases unlikely and with Europe on the brink, the unthinkable -- a sovereign debt default or the collapse of the credit system -- has suddenly become thinkable. To be sure, gold buyers have always been motivated by fear. What has changed is that some of the most respected investors on Wall Street are now among the fearful. "In recent years, we have gone from one bubble and bailout to the next," David Einhorn, a New York money manager who was among the first to foretell the failure of Lehman Brothers, said in a speech last month. "Our gold position reflects our concern that our fiscal and monetary policies are not sufficiently geared toward heading off a possible crisis." Since ancient times, gold has been deemed intrinsically valuable, holding its worth even as governments fell and currencies collapsed, while seemingly casting a spell on its owners. Still, gold can go down -- sometimes sharply. After peaking in 1980 at more than $800 an ounce, gold sank over the next two decades, bottoming out at just over $250 an ounce in 1999. But unlike paper assets that can become worthless, gold always retains at least some value. These days, gold is also something of a political Rorschach test. On conservative talk radio, opposition to the Obama administration's economic policies and warnings that huge budget deficits will set off runaway inflation have made gold a hot topic of on-air discussion -- and lured gold companies as advertisers. Tongue only half in cheek, Glenn Beck advised his audience to consider "Gold, God and guns," while laying out three possible scenarios for the economy: recession, depression, or collapse. One major advertiser on Mr. Beck's show is Goldline, a huge California marketer of gold coins and bars that is also a sponsor of programs hosted by other prominent conservative commentators like Laura Ingraham and Mike Huckabee. Mr. Beck has said he "was a client of Goldline long before they were a client of mine," adding: "I personally don't buy gold as an investment. I buy it for protection." Of course, the right hardly has a monopoly on gold. Mr. Soros, a prominent donor to liberal causes and candidates, holds more than $600 million in bullion and gold mining shares. Even as worries about the global economy have intensified, gold has become easier to buy. Although some people still regard bars of gold in a vault as the ultimate insurance policy, exchange-traded funds, or ETFs, that hold gold have exploded in popularity in recent years. Gold ETFs, which trade like stocks but track the price of physical gold, account for 1,856 tons of gold, up from less than 500 tons in 2005, according to Credit Suisse. Besides luring individual investors, these funds have also made gold more appealing to hedge funds and other institutions, allowing them to own vast amounts of gold without the burden of having to store it. John A. Paulson, a top New York hedge fund manager who earned billions betting against subprime mortgages, holds $3 billion worth of gold ETFs, making gold the largest single position in his $35 billion portfolio. Daniel J. Arbess, who manages more than $2 billion in Perella Weinberg's Xerion fund, is another new gold lover. A few years ago, he said, he would not have taken a second look at gold as an investment. But now Mr. Arbess, a Harvard Law graduate and a generally conservative investor, is very serious about gold. Spiraling deficits in the United States, Japan, and Britain are unsustainable, he said, and could eventually hurt confidence in what are called "fiat currencies" -- paper money not backed by gold, including the United States dollar. "Indebted countries may soon be forced to choose among three politically difficult alternatives: sharp cuts in expenditures, debt default, or printing money to pay off debt," he said, with the last option the most likely outcome. Gold, he said, is a logical hedge against this risk, because firing up the printing presses ignites inflation. True believers note that gold has risen in each of the last nine years, and that while the Standard & Poor's 500-stock index is down 13 percent since 2001, gold is now worth nearly five times what it was then. For all its newfound respectability, gold still manages to bring out the inner survivalist in its adherents. Gold bugs like Peter Schiff of the investment firm Euro Pacific Capital in Westport, Conn., envision a black market arising in the United States, with merchants refusing paper money and insisting on gold instead, while Mr. Hathaway, the gold fund manager, says the credit system has entered "the end game." "People probably still think I'm nuts," Mr. Hathaway said. "But I'm not talking to myself in an isolation chamber anymore. We've got company now." 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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| CFTC's energy industry gadfly gets his way Posted: 12 Jun 2010 09:11 AM PDT By Kara Scannell http://online.wsj.com/article/SB1000142405274870446350457530110036624596... WASHINGTON -- Three years ago, Bart Chilton was the energy industry's guitar-playing gadfly, advocating for what seemed a quixotic change to the way the roughly $350 billion energy commodities markets are traded. Now the views of the Democrat, who sits on the influential Commodity Futures Trading Commission, could become law by July 4, when the Obama administration hopes to get a sweeping financial-overhaul bill through Congress. The 50-year-old always looked out of place in the capital. Partial to cowboy boots and a shoulder-length blond mane, he clears his mind between meetings by strumming on a Kay acoustic guitar in his stately office at the CFTC in Washington. 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 His views on the oil markets seemed especially out of step not long after his appointment to the commission in 2007. He argued that the influx of pension and institutional investors into the markets, which he has dubbed "massive passives," contributed to the wild swings in commodity prices. He added that it concerns him when a "massive passive" might come to own 20% of one market. A 20% stake "gets to be where you might not be able to control prices, but you have the possibility of moving them." The volatile summer of 2008, when $145-a-barrel oil led to $4-a-gallon prices at the pump, was the pivotal moment for the Midwesterner. Mr. Chilton says he largely ignores prices, but the surging cost of oil changed his mind. "I've seen nobody who can justify $147 [a barrel for crude oil]. It doesn't mean the massive passives are the sole culprit. I think they're having an impact. As regulators, it's our job to be asking these questions," he says. Mr. Chilton pushed the CFTC to propose position limits that would prevent traders from having a large concentration in energy contracts for four of the most highly traded commodities at the center of the global energy market. "Position limits that are reasonable," Mr. Chilton says, "would end the possibility of large concentrations in individual markets that could inordinately influence price." Under CFTC chief Gary Gensler, the commission proposed such limits in January. But they drew hostile opposition from three of the five commissioners and the energy-trading industry. In an interview, Mr. Chilton conceded there probably aren't enough votes today to make the limits final. That is why the financial-regulation bill has taken on outsize importance. The Senate version passed last month would require the CFTC to impose limits. While the details would still be up to the agency, Mr. Chilton believes the congressional mandate would pave the way for action. Position limits in energy contracts are just one part of Mr. Chilton's wish list. He also wants the CFTC to have criminal authority to prosecute wrongdoers and a consumer division to respond to investors who think they got ripped off. And he has pushed for position limits on metals trading, an idea that even Mr. Gensler is slow to embrace. Opponents -- who include some academics, fund investors, and futures exchanges -- say they would eventually choke off market forces that ultimately help consumers. Philip Verleger, an economist who runs energy consulting firm PKVerleger LLC, says commodity demand by pension funds has encouraged banks and others to stock up on inventories, helping tamp volatility. He credits the passive investors for keeping energy prices stable last winter during a cold spell. "Chilton is very bright," Mr. Verleger says, but "position limits could consign us back to a world where, when it gets cold, people have to use more natural gas and electricity and they'll see prices double simultaneously." Mr. Chilton's views were shaped, he says, by a year he spent working at an Inland Steel steel mill before heading to Purdue University. He was skimming waste off water before it was released from the mill, and his clothes stank so badly he had to change multiple times, he recalls. "Folks weren't getting what they deserved," he recalls, and he felt someone had to look out for "the little guy." He grew up in Ogden Dunes, Ind., about 45 miles southeast of Chicago, in an engineering family. Grandfather Thomas Chilton was a chemical engineer at DuPont, which named a laboratory in Wilmington, Del., after him. His father was a mechanical engineer who patented a way to create a self-standing artificial Christmas tree. Mr. Chilton left Purdue one semester shy of graduation and worked on Democratic campaigns, including Walter Mondale's failed 1984 presidential run. Later, he became a Democratic staffer on Capitol Hill and worked for then-Senate Majority Leader Tom Daschle of South Dakota, helping the senator push through a big farm bill in 2002. For 18 years, he has lived on the water's edge of the Chesapeake Bay, miles from Washington, and he sometimes motors his boat to restaurants. After a stint at the National Farmers Union, which represents farmers and ranchers, Mr. Chilton was named a CFTC commissioner in 2007 by President George W. Bush, and he quickly ruffled feathers. In early 2008, he raised concerns with the CFTC staff, including then-chief economist Jeffrey Harris, about the effect of "massive passives" on energy prices. "The staff says, 'You don't understand, you're too new,'" recalls Mr. Chilton. "It was the quintessential bureaucratic answer. We haven't found a problem, so none exist." In July 2008 the CFTC staff issued a report saying that financial traders weren't driving oil prices higher. Mr. Chilton was infuriated and publicly called the report "deeply flawed." Today, he charges the report was "political" and done to appease Republicans. Mr. Harris says, "There was no political pressure from any party. We looked but we couldn't find any smoking gun. There were a lot of people working hard to find out what was going on. We had dedicated economists and their reputation was more important than political pressure." Scott O'Malia, a Republican who became a CFTC commissioner last year, says he has had many friendly discussions with Mr. Chilton about the energy position-limits proposal, and the talk often turns to how the retail consumer fares. Mr. O'Malia praises his colleague as a good listener with an "easy style about him" but says he isn't convinced. "We have a different opinion with regard to energy and what impact that will have on higher prices," he says. Mr. Chilton has had better luck with Democrats in Congress. His former counsel last year became staff director for Sen. Blanche Lincoln (D., Ark.), chairman of the Agriculture Committee, and a member of Mr. Chilton's staff was on loan to Ms. Lincoln's committee to help with portions of the financial-regulation bill. Ms. Lincoln introduced a bill with language that was much tougher than what the administration was seeking. That bill made it through the Senate. The Senate bill reflects several of Mr. Chilton's priorities, including the requirement for the CFTC to set position limits. It also broadens the CFTC's authority to sue traders for disruptive trading. Last week, he says he met with Ms. Lincoln to congratulate her on the bill and encouraged her to "hang tough" on the issues as Congress combines it with the House bill. Michael Masters, a hedge-fund manager who supports position limits, says of Mr. Chilton: "Sometimes you need a gadfly to make things happen. He has really served that role." 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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| CFTC's energy industry gadfly gets his way Posted: 12 Jun 2010 09:11 AM PDT By Kara Scannell http://online.wsj.com/article/SB1000142405274870446350457530110036624596... WASHINGTON -- Three years ago, Bart Chilton was the energy industry's guitar-playing gadfly, advocating for what seemed a quixotic change to the way the roughly $350 billion energy commodities markets are traded. Now the views of the Democrat, who sits on the influential Commodity Futures Trading Commission, could become law by July 4, when the Obama administration hopes to get a sweeping financial-overhaul bill through Congress. The 50-year-old always looked out of place in the capital. Partial to cowboy boots and a shoulder-length blond mane, he clears his mind between meetings by strumming on a Kay acoustic guitar in his stately office at the CFTC in Washington. 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 His views on the oil markets seemed especially out of step not long after his appointment to the commission in 2007. He argued that the influx of pension and institutional investors into the markets, which he has dubbed "massive passives," contributed to the wild swings in commodity prices. He added that it concerns him when a "massive passive" might come to own 20% of one market. A 20% stake "gets to be where you might not be able to control prices, but you have the possibility of moving them." The volatile summer of 2008, when $145-a-barrel oil led to $4-a-gallon prices at the pump, was the pivotal moment for the Midwesterner. Mr. Chilton says he largely ignores prices, but the surging cost of oil changed his mind. "I've seen nobody who can justify $147 [a barrel for crude oil]. It doesn't mean the massive passives are the sole culprit. I think they're having an impact. As regulators, it's our job to be asking these questions," he says. Mr. Chilton pushed the CFTC to propose position limits that would prevent traders from having a large concentration in energy contracts for four of the most highly traded commodities at the center of the global energy market. "Position limits that are reasonable," Mr. Chilton says, "would end the possibility of large concentrations in individual markets that could inordinately influence price." Under CFTC chief Gary Gensler, the commission proposed such limits in January. But they drew hostile opposition from three of the five commissioners and the energy-trading industry. In an interview, Mr. Chilton conceded there probably aren't enough votes today to make the limits final. That is why the financial-regulation bill has taken on outsize importance. The Senate version passed last month would require the CFTC to impose limits. While the details would still be up to the agency, Mr. Chilton believes the congressional mandate would pave the way for action. Position limits in energy contracts are just one part of Mr. Chilton's wish list. He also wants the CFTC to have criminal authority to prosecute wrongdoers and a consumer division to respond to investors who think they got ripped off. And he has pushed for position limits on metals trading, an idea that even Mr. Gensler is slow to embrace. Opponents -- who include some academics, fund investors, and futures exchanges -- say they would eventually choke off market forces that ultimately help consumers. Philip Verleger, an economist who runs energy consulting firm PKVerleger LLC, says commodity demand by pension funds has encouraged banks and others to stock up on inventories, helping tamp volatility. He credits the passive investors for keeping energy prices stable last winter during a cold spell. "Chilton is very bright," Mr. Verleger says, but "position limits could consign us back to a world where, when it gets cold, people have to use more natural gas and electricity and they'll see prices double simultaneously." Mr. Chilton's views were shaped, he says, by a year he spent working at an Inland Steel steel mill before heading to Purdue University. He was skimming waste off water before it was released from the mill, and his clothes stank so badly he had to change multiple times, he recalls. "Folks weren't getting what they deserved," he recalls, and he felt someone had to look out for "the little guy." He grew up in Ogden Dunes, Ind., about 45 miles southeast of Chicago, in an engineering family. Grandfather Thomas Chilton was a chemical engineer at DuPont, which named a laboratory in Wilmington, Del., after him. His father was a mechanical engineer who patented a way to create a self-standing artificial Christmas tree. Mr. Chilton left Purdue one semester shy of graduation and worked on Democratic campaigns, including Walter Mondale's failed 1984 presidential run. Later, he became a Democratic staffer on Capitol Hill and worked for then-Senate Majority Leader Tom Daschle of South Dakota, helping the senator push through a big farm bill in 2002. For 18 years, he has lived on the water's edge of the Chesapeake Bay, miles from Washington, and he sometimes motors his boat to restaurants. After a stint at the National Farmers Union, which represents farmers and ranchers, Mr. Chilton was named a CFTC commissioner in 2007 by President George W. Bush, and he quickly ruffled feathers. In early 2008, he raised concerns with the CFTC staff, including then-chief economist Jeffrey Harris, about the effect of "massive passives" on energy prices. "The staff says, 'You don't understand, you're too new,'" recalls Mr. Chilton. "It was the quintessential bureaucratic answer. We haven't found a problem, so none exist." In July 2008 the CFTC staff issued a report saying that financial traders weren't driving oil prices higher. Mr. Chilton was infuriated and publicly called the report "deeply flawed." Today, he charges the report was "political" and done to appease Republicans. Mr. Harris says, "There was no political pressure from any party. We looked but we couldn't find any smoking gun. There were a lot of people working hard to find out what was going on. We had dedicated economists and their reputation was more important than political pressure." Scott O'Malia, a Republican who became a CFTC commissioner last year, says he has had many friendly discussions with Mr. Chilton about the energy position-limits proposal, and the talk often turns to how the retail consumer fares. Mr. O'Malia praises his colleague as a good listener with an "easy style about him" but says he isn't convinced. "We have a different opinion with regard to energy and what impact that will have on higher prices," he says. Mr. Chilton has had better luck with Democrats in Congress. His former counsel last year became staff director for Sen. Blanche Lincoln (D., Ark.), chairman of the Agriculture Committee, and a member of Mr. Chilton's staff was on loan to Ms. Lincoln's committee to help with portions of the financial-regulation bill. Ms. Lincoln introduced a bill with language that was much tougher than what the administration was seeking. That bill made it through the Senate. The Senate bill reflects several of Mr. Chilton's priorities, including the requirement for the CFTC to set position limits. It also broadens the CFTC's authority to sue traders for disruptive trading. Last week, he says he met with Ms. Lincoln to congratulate her on the bill and encouraged her to "hang tough" on the issues as Congress combines it with the House bill. Michael Masters, a hedge-fund manager who supports position limits, says of Mr. Chilton: "Sometimes you need a gadfly to make things happen. He has really served that role." 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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| Comex may be losing influence over metal prices, Butler tells King World News Posted: 12 Jun 2010 07:14 AM PDT 3:10p ET Saturday, June 12, 2010 Dear Friend of GATA and Gold (and Silver): In his weekly interview with Eric King of King World News, silver market analyst Ted Butler speculates from evidence that Comex futures trading may be losing influence over gold and silver prices, that the big commercial shorts in silver may be having trouble covering in their usual way, and that the gold exchange-traded fund GLD may be having trouble getting delivery of metal. The interview is about 6 minutes long and you can find it at King World News 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 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: 12 Jun 2010 06:00 AM PDT Jim, Home foreclosures are up 44% in May with a prediction that another 5 million delinquent mortgages may end in foreclosure. These numbers are staggering but I haven't heard them discussed in the nightly news. MOPE is still the order of the day. Best regards, U.S. Home Foreclosures Climb 44% to Record in May (Update1) June 10 (Bloomberg) — U.S. home foreclosures reached a record for the second consecutive month in May, with increases in every state, as lenders stepped up property seizures, according to RealtyTrac Inc. Bank repossessions climbed 44 percent from May 2009 to 93,777, the Irvine, California-based data company said today in a statement. Foreclosure filings, including default and auction notices, rose about 1 percent to 322,920. One out of every 400 U.S. households received a filing. "We're nowhere near out of the woods," Rick Sharga, RealtyTrac's senior vice president for marketing, said in a telephone interview. "We're likely to set a quarterly record for home seizures if June is anything like May." Lenders are completing the "inevitable progression" of taking properties from homeowners who stopped paying, Sharga said. He predicted last month that another 5 million delinquent mortgages will end in foreclosure in addition to properties that had already been repossessed.
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| International Forecaster June 2010 (#4) – Gold, Silver, Economy + More Posted: 12 Jun 2010 05:45 AM PDT By Bob Chapman, The International Forecaster US MARKETS As we have noted before the rage of 1789 in France cost the heads of 300,000 tormentors out of 30 million Frenchmen. The question that presents itself is will something like this occur again in our times We suppose it could, but we won't know until it begins to happen. The most likely location for such an event is in Greece, which has already experienced major demonstrations and rioting. There is no question that in many parts of the world people are disgruntled and in many cases enraged with their governments and particularly with the financial sector. Not only has the populace been defrauded, but also the fraud and deceit continue unabated. In Europe almost every country is or will be subjected to austerity programs. In America we have rage pointed at Wall Street, banking, corporate America and government. The Tea Party movement addresses that in a number of ways from a great cross section of Americans. They see the blatant corruption tearing their country, republic and democracy apart. They do not want capitalism torn apart by the Council on Foreign Relations, the Trilateral Commission, the Bilderbergers and the Illuminati. They do not want fascism, socialism and Communism shoved down their throats. They do not want any new world order or a one-world government. In all countries there is a faction of more than 10% of the population that are willing to sacrifice their lives to make sure that doesn't happen. They have seen the 1980s S&L crisis where billions were stolen and few went to jail. The same was true with the failures of the 1990s and into the new century. We saw LTCM and no one went to jail and then Tyco, Enron, Qwest and WorldCom. Then there was Michael Milken and Drexel, Burnham Lambert. He was charged with almost 100 crimes, pled to six, paid a $2 billion fine, spent two years in jail and got to keep $1 billion for his crimes. Today he basks in luxury as a reward. Then came the biggest scam of all and that was the Madoff caper. Financial crime by sociopaths is still flourishing. That is because our system of jurisprudence doesn't work. We have one set of rules for connected Illuminist, another for common white-collar criminals and another set of rules for us. Is it any wonder that the public is outraged at such crime? George Soros, Illuminist, is held up as a shinning example of financial acumen. He was convicted of stock fraud in Paris, appealed and lost and was convicted in Hungry as well. Why is that never mentioned when he appears in interviews and on television? It is because his elitist group controls these venues. The same is true of Warren Buffett whose firm, Berkshire Hathaway, was convicted of a $300 million accounting fraud and paid a $100 million fine. As you can see no one hardly ever goes to jail and those who do are not connected Illuminists do end up in jail. There is essentially never any payback. All the CFTC and SEC want are the fines to cover their expenses and to expand their staffs, and they only act when forced too. There has been very little payback and the public rightly wants revenge. Thus far they have gotten little or nothing from their well compensated representatives and senators, who generally are crooks and malfeasants. All this doesn't go down very well with real unemployment of 22-3/8%, soon to be 23-3/4%. As the public stands in these unemployment lines they watch the Fed feed money to financial institutions, which they created out of thin air, and the debt of which these same unemployed are responsible for. The banks, brokerage houses and insurance companies ae illegally kept from bankruptcy and with these same funds reap unbelievable profits. At the same time incompetent executives receive outrageous compensation. The public is deeply disturbed and well they should be. Is it any wonder that incumbents have a 27% approval-rating going into next November's election? That is the lowest number since 1994. It is interesting that those in both major parties share the disappointment. On the other hand unemployment benefits have been extended to two years. We suspect with this gang in the White House, House and Senate, that those benefits could go on forever as our sovereign debt collapses, such as Greece's did. Voters see no morality, representation and integrity in both houses. Payoffs and fraud flourish and no one seems to care whether they get caught or not. Grab as much as you can as fast as you can and sell your soul if necessary. Of course, the SEC and CFTC are nowhere to be found as they protect the crooks running Wall Street, in banking and in insurance. There is little incompetence – they are all in on it. Remember the connected elite never go to jail. They are fined and the shareholders pay the bill. The financial industry is loaded with fraud and always has been. Can you imagine a banker making loans to the completely unqualified and using 70 to 1 leverage, when 9 times deposits is acceptable? Can you image rating agencies rating paper as AAA when in fact it is BBB? Then there are the 35% overvaluations of assets that lead to bank failures and no one goes to jail. This is serious crime and these crooks just walk away Scot-free. What a system. The Bernie Madoff's flourish and have no remorse having stolen from little old ladies. He complains they threw money at me, what was I to do? Refuse it you scumbag. How can any professional not express dismay when banks such as Goldman Sachs, and JPMorgan Chase never have trading losses. We did that for 25 years and they and we know that is impossible. Worse yet, 80% of their clients lost money. Those trading profits made up 93% of profits at Morgan Stanley as well. As a professional we know the only way that can be accomplished is by screwing your clients. We can count in as well naked shorting, front running (flash trading), theft, money laundering, fraud and rules that let players neither admit nor deny and pay a fine. This is what your financial system has come too. You are controlled by a group of criminals. As a result of this outright criminality we are being led into one of two solutions – either a plunge into deflationary depression or a systemic crisis that is approaching three years in duration. The direction taken by the Federal Reserve, the banksters and Wall Street is yet to be determined. Our guess is the inflationary onslaught has only begun. We are well aware that M3, money and credit, over the past 15 months, has been reduced from growth of 18% to a negative of 5.9%. That and other things were done to head off inflation, which is currently 2% officially, but unofficially is 8%. We announced that an inflationary depression had begun in February of 2009, some 16 months ago. The US represents about half of world GDP so what happens in America will affect the entire world. In three months America will have experienced three years of recession/depression, the longest and deepest financial and economic contraction since the 1930s. A year ago the economy was headed downward and had it not been for $800 billion in stimulus and an additional $1.5 trillion injection by the Fed, we would currently be far deeper into depression. That means that we are seeing the end of the effect of stimulus and if it is not repeated the economy will falter and slip into deflationary depression. Each time the Fed and in part Congress allows this to happen it takes a much greater amount of money, credit and fiscal stimulus to keep the economy in positive territory and therein lies the seeds of hyperinflation. In the 1973-75 recession we saw inflation. That was followed by further stimulus provided again by the Fed, which culminated in the economic blow-off of 1981, which in turn was followed by high interest rates and a deflationary recession. These two events tell you recessions/depressions can be either inflationary or deflationary. Compounding the problem is the accumulation of sovereign government debt, which has been and will continue to grow exponentially. That certainly is inflationary, but worse yet is it cannot be paid back no matter how high taxes are raised. We need not remind you of the real estate collapse that is still in progress and the incumbent bonds many of which are close to worthlessness. These are deflationary events that over the past three years they have been covered up, massive injections of money and credit. Deflation was offset, or more than offset by inflation. As a result many corporations are carrying two sets of books. One set contains the toxic waste the other set the better assets. This has caused terrible problems especially in the banking system. This is the prime reason so many banks have problems. Eighty-one have fallen this year and that figure will more than double before the year ends. This is why the Fed wants to take over the FDIC. Once the FDIC is out of money, if they are regulated by the Fed, all the Fed has to do is create more money out of thin air to guarantee deposits. At the same time the Fed will attempt to monopolize the banking system. They will allow weak banks to fail and others to be absorbed until there are only 5, 10 or 15 banks in the country. The reason we do not as yet have hyperinflation is that banks that have borrowed $2 trillion are not lending it into the system; they are depositing those funds with the Fed. If banks start to increase lending then inflation will jump because the funds will no longer be sterile, they'll have been monetized, or if you may, inflationized. Now you can understand part of the reason banks have reduced lending by more than 20%. In the absence of increased bank lending we also have an M3, the supply of money and credit, which is now negative. In fact, at a record low. That means a deepening recession/depression and a lower stock market. A correction in all probability similar to 1973-75. Whether we will see higher oil prices, as we did then, remains to be seen. A Middle East war could provide that element. In fact, recently we said there would be negative GDP growth in the 3rd and 4th quarters due to the lack of stimulus of one kind or another. States are in a terrible fix and unless the federal government comes forth with aid many states will become insolvent. This would add to the downward spiral. The government will have to come to the aid of the states otherwise the system will collapse. That as well means massive layoffs to add to the already growing unemployment situation. The government will become the lender of last resort and a bankrupt. A latter day version of Atlas Shrugged. All the while the Fed is creating money out of thin air funding these bankrupts, as inflation climbs. Keep in mind that with the assistance of the Fed the nation would already be insolvent, save for its status of the dollar as a reserve currency. The dollar is in the process of being dismantled, so that our elitists can usher in a new world currency eventually. An example is Greece has a very real problem, that probably only default can solve. Greece has 1% of the problem the US has and that will be reflected in the falling value of the dollar not only versus other currencies, but most noticeably versus gold. In fact, for the past four years all currencies have fallen in value versus gold. In time all currencies will be sold in part to purchase gold. Gold is again becoming the currency standard for the world whether the elitists like it or not. The professionals, the markets, and the central bankers know this and cannot control it, as hard as they try. All the taps can be turned on at a moments notice, so hold back on your decisions on which way the central banks are going to go. Unemployment is worsening and that means income cannot grow and that means the economy cannot grow. The bottom line is in our criminal world your only protection is in gold and silver bullion, coins and shares. If you bought these in June of 2000 you have kept your buying power as that of the US dollar declined. The suppression has been constant, but stay the course, the greatest gains have yet to be made. By owning these assets you are preserving your wealth and then some. Don't be deterred by these writers who have been perpetually wrong. Go long and stay long. It is your only hope of retaining what you have. Looking at the residential and commercial real estate markets and many other factors tells us if the Fed doesn't use massive monetary stimulus quickly the economy will fall into a terrible depression. The mortgage application index fell 12.2% adjusted and 21.1% unadjusted. The purchase index fell an adjust 5.7% and plunged 16.3% unadjusted. That is 30.4% YOY. Purchase applications have fallen 35% in just four weeks and rates are lower. Prices are again headed down and the 3rd and 4th quarters are going to be terrible. While this transpires government encourages the banks to hide and delay foreclosures. Some have allowed tenants to stay in the homes rent-free for up to three years. this has created a giant shadow inventory. Speculators cannot hold the market up forever. They are always potential sellers. Put together we see another 20% decline in prices and perhaps more. Most homeowners have 5% equity and 25% or more have no equity. By 2013, 75% could be without equity. This negative equity continues to make homeowners walk away from their homes and as well create a major social problem, plus destroy the solvency of the middle class. The March wholesale inventory figure was revised from 0.4% to 0.7% and April was 0.4%. Jobless claims for the week ending June 5th were $456,000 vs. the consensus 450,000. That was off 3,000. The 4-week moving average rose 2,500 to 463,000. The labor market is the worst since the 1930s and we believe it will rise from 22-3/8% to 23-3/4% over the next few months. This past week the commercial paper market rose by $1.3 billion to $1.065 trillion. May foreclosure filings totaled 323,000, a 4% MOM increase. Leading the losers were Nevada, Arizona and Florida with the highest rates. By totals California, Florida and Michigan had the most. The May budget deficit was $135.93 billion vs. YOY $189.65 billion. – This was a section from the most recent issue of the International Forecaster. You can read the full 40 page issue by using the information below to subscribe. THE INTERNATIONAL FORECASTER
P. O. Box 510518, Punta Gorda, FL 33951-0518 Published and Edited by: Bob Chapman CHECK OUT OUR WEBSITE 1-YEAR $159.95 U.S. Funds US AND CANADIAN SUBSCRIBERS: Make check payable to Robert Chapman (NOTInternational Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address. Or: We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$159.95 for a one-year subscription. You can email us in two separate emails (1- the Credit Card Number with full name, address and your telephone number and (2- the Expiration date on the card.
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| Our Short Sale Offer – One Month Later Posted: 12 Jun 2010 05:15 AM PDT As first discussed here last month, we recently made an offer on a short sale property here in our new hometown of Bozeman, Montana and, now exactly one month later, there's not a whole lot to show for that effort aside from a slightly higher level of stress, some insight into the short sale process, and growing impatience with the banks involved. The seller signed off on the deal the day after we submitted it but we've yet to hear anything back in writing from the bank. About two weeks ago we were told that if we wanted to pay full price, we could have already closed by now.
If this area is anything like the rest of the country, absent government life support (in the form of the homebuyer tax credit) sales are now in a virtual free-fall, down 25-30 percent or more last month based on leading indicators such as mortgage purchase applications. We hear things third hand – from the bank, to the other realtor, to our realtor, to us – so, who knows what gets lost in the translation. Our weekly query went unanswered this week and the last we were told was the bank would take its normal 30-45 days to respond. The reputation that short-sales have earned is well deserved and having such an important (and emotional) decision hanging out there for weeks or months at a time takes a toll that you can only appreciate if you've been through it. At this point, it's not clear to me whether short-sales are more stressful for the seller or the buyer – at least the seller knows his fate and it's only a matter of how long they get to live there without paying any mortgage or rent. The buyer, on the other hand, basically gets their life put on hold with no assurance that the bank will ever respond. I think it's safe to say that once you've been through this process and ended up with nothing at the end of it, you'll never make an offer on a short sale again.
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| China Downplays Role of Gold in its Forex Holdings Posted: 12 Jun 2010 05:15 AM PDT This past week China's State Administration of Foreign Exchange, or SAFE, indicated that it will "improve its diversification strategy on investing its foreign-exchange reserves–which at nearly $2.5 trillion is the world's largest–but gave no details," according to The Wall Street Journal. The regulator had earlier indicated that the euro will stay an important part of its mix, despite the region's debt crisis. More recently, though, it has also downplayed the usefulness of gold in particular as an asset class. This from MarketWatch: "China's State Administration of Foreign Exchange, the regulator which oversees the nation's nearly $2.5 trillion foreign exchange stockpile, said Thursday that the gold market is too small, illiquid and volatile to be considered suitable for asset allocation, according to a Reuters report… "Safe did not give an update on its gold holdings, which rose to 1,054 tons last year from 600 tons in 2003, as a result of purchases of local production. Safe also said in the annual report that it plans to improve the diversification strategy for the management of China's reserves, including the range of asset classes it believes are suitable. It did not provide details." On the one hand, China is seeking to improve the way it manages its foreign exchange reserves. On the other hand, it's denying any speculation of big changes in dollar- or euro-denominated assets. China's also highlighting its disinterest in gold, despite nearly doubling its gold holdings over the past seven years. It all seems a little contradictory… and the statement doesn't really leave much room for new alternatives. It'll be interesting to see how China ends up stashing its huge nest egg. You can read more details in coverage at The Wall Street Journal and at MarketWatch. Best, Rocky Vega, China Downplays Role of Gold in its Forex Holdings 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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| Posted: 12 Jun 2010 05:13 AM PDT Bullion Vault Yet the United States government – and others – believe that Beijing will also allow the Yuan currency to appreciate. Surely the Chinese investor will be hurt if this happens? We know the Chinese government has been adding to its official gold reserves for at least six years now. Local Gold Mining production is not leaving the country, nor will it for many years to come. At the same time the Chinese government favors the development of new Gold Investment products, opening up local gold markets and encouraging the major Chinese banks to sell gold across China. This is a particularly important development for the global gold market in the light of the fact that per capita, the Chinese hold the least amount of gold amongst the Asian nations. The savings propensity of the average Chinese earner is remarkable, for they save around 40% of their disposable income. To date these have been held on deposit at the banks, with the more sophisticated venturing into the equity markets there. But in times of volatile 'spikes', these can behave more like gambling casinos than investment sources. Gold in the Chinese mind represents true value and leads to financial security. Consequently, the potential for Buying Gold in this nation of 1.4 billion people – now in a rapid process of financial empowerment – is tremendous and could well, in time, make China one of if not the most important investment markets for gold. The main restraint on Chinese gold buying, whether by individuals or the government, is the small size of the global gold market. Persistent long-term buying is the only way the acquisition of large quantities of gold can be approached. Higher prices over time may well flush out sellers of gold. So we expect Chinese gold buying to remain persistent for the foreseeable future. For years now, however, the US in particular has been calling for an appreciation in the Yuan. Even the International Monetary Fund (IMF) has told Beijing that it is in the interests of China to let the Yuan appreciate. But no heed has been taken of such demands. Yes, the Chinese have allowed the West to get the impression that they may well let the Yuan appreciate, but a look at the advantages to China of a pegged Yuan to the Dollar tell us another story. The original reason for the pegging of the Yuan to the US Dollar was to capture the price advantage Chinese goods had over the equivalent products made everywhere else. As the Dollar is the global reserve currency, such prices were easily translated into other currencies. As we see by this week's export report for May from China, the rise of 48% shows what advantages such pegging and pricing brings as the world slowly recovers. Yes import could be cheaper, but that would only save money not promote industry. After all China wants and needs to develop its economy. We have been touting the future role of the Yuan as a global reserve currency for well over the last two years now. Since then we have seen the tentative steps that the Chinese need to take to ensure their banks can cope with this changed structure. Since expanding Yuan trade in just Hong Kong, it is now spread throughout the main manufacturing hub of Southern China. When they are ready, we do expect to see a flood of Yuan to all their international trading partners, to pay for imports and then to make Yuan available to pay for Chinese exports. As Chinese trade is already global, there will be a point when Chinese importers will price imports and exports in the Yuan. While this process is in transition, we also expect their pricing policies to widen to include allowing payment for Chinese exports in the broad spectrum of global currencies. This will allow China to diversify its reserves and lower its exposure to just the Dollar or the Euro. When the internationalization of the Yuan happens there would normally be a tremendous fall in the value of the Yuan as it floods markets, but in today's context that fall would be absorbed by the pressure for the Yuan that is now being experienced. When it does happen, we believe that China will want the Yuan to either hold current levels of in fact fall. Having said all the above, we have to ask you if you expect the Chinese government to promote Gold Investment so strongly to its citizens, then knowingly engineer a fall in the Yuan price of gold? Our view is that the Chinese government would not wish to hurt its own like that, but with a large dose of forethought, would have blended to two policies to the benefit of its own citizens. If they didn't what would happen to Chinese gold demand.
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| "Always Start with Gold Bullion" Posted: 12 Jun 2010 05:13 AM PDT Bullion Vault A FREQUENT guest on CNBC and the Wall Street Journal radio network, Adrian Day is a British-born writer and money manager. Graduate of the London School of Economics – and now head of Adrian Day Asset Management – he specializes in global diversification and Gold Mining equities for individual and institutional clients. Adrian Day's forthcoming book, Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks, will be published by Wiley this autumn. Here he talks to the Gold Report about the near-term outlook for Gold Bullion, mining stocks, and other US-Dollar hedges… The Gold Report: Earnings numbers are up for US companies, the US Dollar is gaining strength, unemployment numbers are improving; yet, as you said in a recent newsletter, you remain cautious on the market and are generally looking for opportunities to sell. What do you see in the economy that makes you cautious? Adrian Day: That's a good question. First of all, we have to recognize that the economy and the market don't always go hand in hand. The market tends to anticipate developments. That is very clear that at the bottom of recessions when the market turns around and starts moving up because it anticipates recovery. What perhaps we're seeing with the market's action this year – and particularly in the last six weeks – is a look ahead to a second leg down in this recession. But what am I seeing? Clearly there's been some positive news on the economy, but there's also been negative news – especially if you look at consumer spending, which was up at the end of last year and the beginning of this year, but the most recent consumer spending numbers turned down again. I think that speaks to the psychology of people – they pretty much went a whole year without spending a lot of money, certainly not spending money on discretionary items. A lot of people said: "We gave up Christmas last year; we're not giving it up this year whatever we have to do." So people spent money on the holidays, but there's a limit. If you don't have the cash and your credit card company doesn't increase your limit, there's a ceiling on how much you can spend. TGR: But the employment numbers are higher. Adrian Day: We're seeing a little bit of improvement in the employment numbers, though we have to recognize that a lot of that is temporary jobs and government jobs; in last month's report, new jobs were almost entirely temporary census jobs. Unemployment still remains very high. It's a mixed picture but at this stage of the recovery, things should be considerably better than they are. One of the things that concerns me is the lack of lending by the banks, particularly to small businesses – that is of grave concern for the economy. As for the stock market, you just have to look at a graph to see that it's stopped going up; it's rolling over. I am not a technician by any means; but you can that see it bounced right up against that 200-day moving average and fell, and you know the market just looks very much as though it is moving downwards and the risk in the market has gone up. TGR: Are there any particular areas where you're looking to sell? Adrian Day: It's generally across the board, and it's really a matter of valuation for us. Clearly, one tends to sell things either when – or I do because I am a fundamental value investor – things go wrong or when the company deviates from its strategy. But I certainly don't sell because a good quality company that is doing everything right goes down and becomes a better value. I don't sell on that. We're just selling things that look overvalued to us. We have also been selling some things in Japan, for example, because the economy in Japan appears to be turning downward again. TGR: You said earlier that at this stage of the recovery things should be better and that you were specifically concerned about the lack of lending by banks. Is it a matter of a reluctance to lend or is it that there are few good lending opportunities for the banks? Adrian Day: The banks have a good deal going frankly. Banks have been able to borrow from the Fed in almost unlimited amounts at exceptionally low interest rates. If you could borrow billions of Dollars at a quarter of a percent from the Federal Reserve, perhaps you wouldn't feel inclined to take risks. You'd just put it in Treasury Bills and make a nice risk-free profit. That's what the banks have been doing. That is one reason I like some of these business development companies. These are companies that lend money to small businesses; that's their job – the banks pull their horns in, which means that the business development companies (BDCs) are able to see better opportunities at higher rates of interest. TGR: Yesterday, the European Central Bank (ECB) warned that the region's banks may face losses of 195 billion Euros in a second wave of potential loan losses over the next 18 months. In light of this, many investors are turning to gold as a safe alternative to paper currencies. Do you expect the Gold Price to soften for the summer, and where do you see it heading by the end of 2010? Adrian Day: I would definitely say that the risk of a decline has increased in recent weeks. Clearly in the past five to six weeks gold has risen well above trend – a lot of it from frantic buying from Europe, particularly Germany. We're also seeing signs of scrap sales in India picking up; and, if that continues, it could put pressure on the price because that's a very large market for gold. Of course, seasonality is the foundation of the question. June, July and the beginning of August are typically the weak periods for gold. There is a risk of gold being soft over the next couple of weeks, but I am certainly not suggesting anyone sell. A little bit of caution is called for in chasing gold right now. I always like to focus on the big trend, and the big trend for gold is up. A period like this might give me pause, but we want to avoid trying to be too clever in selling and buying back and that kind of stuff. I definitely think gold is going up by the end of the year, by how much I don't know. Someone once said: "Never predict the price and the timeframe, either one or the other." I definitely think it's going up. All the reasons people have been Buying Gold over the last six to nine months are still there; they haven't diminished at all, in fact, the reasons have even increased due to the sovereign debt risk. TGR: You said people were frantic Buying Gold in Germany. Please explain why. Adrian Day: With the bailouts, essentially from Germany to Greece, which is what it was, a lot of Germans are extremely concerned about the value of the Euro and what's next. Is Spain next? Is Italy after that? Is Portugal behind that? And so a lot of Germans have been moving out of the Euro and putting their savings into gold, gold coins. Most of the mints and refineries in Europe and the storage companies are sold out and way behind. Premiums on coins have gone up; premiums on Krugerrands – a popular coin in Germany – have gone from 3-4% to 7% or 8%. There is no room in storage vaults. Those are indications of a mania, but it's very new and very short-term. There's no sign of a mania in this country – increased interest, but not a mania. TGR: Are you using currencies as a way to hedge against USD devaluation along with Buying Gold? Adrian Day: Yeah, a little bit; I prefer gold for a lot of reasons, and let's not forget that every currency we look at is simply paper; there is no currency backed by gold. But clearly some are stronger than others, and it strikes me that the Asian currencies, outside of Japan, are the strongest of all. The governments have better balance sheets, the banking systems tend to be stronger. The Asian currencies tend to be less leveraged, and so we like some of the Asian currencies a lot. Two that we hold right now are the Singapore Dollar, which is extremely liquid and can be purchased in small amounts; the other is a little bit unusual – the Hong Kong Dollar. Some people might say: "Why buy the Hong Kong Dollar? It is tied to the USD." That's actually true, and that's partly the rationale to buy it. If you're a USD investor, the downside risk in buying the Hong Kong Dollar is extremely low. The thought that Hong Kong would break the link and that the Hong Kong Dollar would decline against the US Dollar is such a low risk that you can almost call it 'zero'. However, at some point given the stronger balance sheet in Hong Kong, one can easily see that it's going to rebound against the Dollar. I should point out that neither of these are investments; they're merely ways of holding savings. TGR: There may not be any gold-backed currencies but there are ways to get exposure to gold. What are some of those? Adrian Day: I think people should always start with Gold Bullion. I am always amazed at how many people own a bunch of tiny little Gold Mining stocks, but don't any bullion or own any of the big royalty, or more-established, companies. TGR: What are some ways you recommend people hold bullion? Adrian Day: There are many different ways to own it, and a lot depends on your timeframe for owning. Obviously, if you own bullion and store it, that's a very safe way – except there are costs to storage. We're perfectly comfortable buying the GLD, the ETF, which is extremely liquid and reflects the price of gold.
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| "Always Start with Gold Bullion" Posted: 12 Jun 2010 05:13 AM PDT Bullion Vault A FREQUENT guest on CNBC and the Wall Street Journal radio network, Adrian Day is a British-born writer and money manager. Graduate of the London School of Economics – and now head of Adrian Day Asset Management – he specializes in global diversification and Gold Mining equities for individual and institutional clients. Adrian Day's forthcoming book, Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks, will be published by Wiley this autumn. Here he talks to the Gold Report about the near-term outlook for Gold Bullion, mining stocks, and other US-Dollar hedges… The Gold Report: Earnings numbers are up for US companies, the US Dollar is gaining strength, unemployment numbers are improving; yet, as you said in a recent newsletter, you remain cautious on the market and are generally looking for opportunities to sell. What do you see in the economy that makes you cautious? Adrian Day: That's a good question. First of all, we have to recognize that the economy and the market don't always go hand in hand. The market tends to anticipate developments. That is very clear that at the bottom of recessions when the market turns around and starts moving up because it anticipates recovery. What perhaps we're seeing with the market's action this year – and particularly in the last six weeks – is a look ahead to a second leg down in this recession. But what am I seeing? Clearly there's been some positive news on the economy, but there's also been negative news – especially if you look at consumer spending, which was up at the end of last year and the beginning of this year, but the most recent consumer spending numbers turned down again. I think that speaks to the psychology of people – they pretty much went a whole year without spending a lot of money, certainly not spending money on discretionary items. A lot of people said: "We gave up Christmas last year; we're not giving it up this year whatever we have to do." So people spent money on the holidays, but there's a limit. If you don't have the cash and your credit card company doesn't increase your limit, there's a ceiling on how much you can spend. TGR: But the employment numbers are higher. Adrian Day: We're seeing a little bit of improvement in the employment numbers, though we have to recognize that a lot of that is temporary jobs and government jobs; in last month's report, new jobs were almost entirely temporary census jobs. Unemployment still remains very high. It's a mixed picture but at this stage of the recovery, things should be considerably better than they are. One of the things that concerns me is the lack of lending by the banks, particularly to small businesses – that is of grave concern for the economy. As for the stock market, you just have to look at a graph to see that it's stopped going up; it's rolling over. I am not a technician by any means; but you can that see it bounced right up against that 200-day moving average and fell, and you know the market just looks very much as though it is moving downwards and the risk in the market has gone up. TGR: Are there any particular areas where you're looking to sell? Adrian Day: It's generally across the board, and it's really a matter of valuation for us. Clearly, one tends to sell things either when – or I do because I am a fundamental value investor – things go wrong or when the company deviates from its strategy. But I certainly don't sell because a good quality company that is doing everything right goes down and becomes a better value. I don't sell on that. We're just selling things that look overvalued to us. We have also been selling some things in Japan, for example, because the economy in Japan appears to be turning downward again. TGR: You said earlier that at this stage of the recovery things should be better and that you were specifically concerned about the lack of lending by banks. Is it a matter of a reluctance to lend or is it that there are few good lending opportunities for the banks? Adrian Day: The banks have a good deal going frankly. Banks have been able to borrow from the Fed in almost unlimited amounts at exceptionally low interest rates. If you could borrow billions of Dollars at a quarter of a percent from the Federal Reserve, perhaps you wouldn't feel inclined to take risks. You'd just put it in Treasury Bills and make a nice risk-free profit. That's what the banks have been doing. That is one reason I like some of these business development companies. These are companies that lend money to small businesses; that's their job – the banks pull their horns in, which means that the business development companies (BDCs) are able to see better opportunities at higher rates of interest. TGR: Yesterday, the European Central Bank (ECB) warned that the region's banks may face losses of 195 billion Euros in a second wave of potential loan losses over the next 18 months. In light of this, many investors are turning to gold as a safe alternative to paper currencies. Do you expect the Gold Price to soften for the summer, and where do you see it heading by the end of 2010? Adrian Day: I would definitely say that the risk of a decline has increased in recent weeks. Clearly in the past five to six weeks gold has risen well above trend – a lot of it from frantic buying from Europe, particularly Germany. We're also seeing signs of scrap sales in India picking up; and, if that continues, it could put pressure on the price because that's a very large market for gold. Of course, seasonality is the foundation of the question. June, July and the beginning of August are typically the weak periods for gold. There is a risk of gold being soft over the next couple of weeks, but I am certainly not suggesting anyone sell. A little bit of caution is called for in chasing gold right now. I always like to focus on the big trend, and the big trend for gold is up. A period like this might give me pause, but we want to avoid trying to be too clever in selling and buying back and that kind of stuff. I definitely think gold is going up by the end of the year, by how much I don't know. Someone once said: "Never predict the price and the timeframe, either one or the other." I definitely think it's going up. All the reasons people have been Buying Gold over the last six to nine months are still there; they haven't diminished at all, in fact, the reasons have even increased due to the sovereign debt risk. TGR: You said people were frantic Buying Gold in Germany. Please explain why. Adrian Day: With the bailouts, essentially from Germany to Greece, which is what it was, a lot of Germans are extremely concerned about the value of the Euro and what's next. Is Spain next? Is Italy after that? Is Portugal behind that? And so a lot of Germans have been moving out of the Euro and putting their savings into gold, gold coins. Most of the mints and refineries in Europe and the storage companies are sold out and way behind. Premiums on coins have gone up; premiums on Krugerrands – a popular coin in Germany – have gone from 3-4% to 7% or 8%. There is no room in storage vaults. Those are indications of a mania, but it's very new and very short-term. There's no sign of a mania in this country – increased interest, but not a mania. TGR: Are you using currencies as a way to hedge against USD devaluation along with Buying Gold? Adrian Day: Yeah, a little bit; I prefer gold for a lot of reasons, and let's not forget that every currency we look at is simply paper; there is no currency backed by gold. But clearly some are stronger than others, and it strikes me that the Asian currencies, outside of Japan, are the strongest of all. The governments have better balance sheets, the banking systems tend to be stronger. The Asian currencies tend to be less leveraged, and so we like some of the Asian currencies a lot. Two that we hold right now are the Singapore Dollar, which is extremely liquid and can be purchased in small amounts; the other is a little bit unusual – the Hong Kong Dollar. Some people might say: "Why buy the Hong Kong Dollar? It is tied to the USD." That's actually true, and that's partly the rationale to buy it. If you're a USD investor, the downside risk in buying the Hong Kong Dollar is extremely low. The thought that Hong Kong would break the link and that the Hong Kong Dollar would decline against the US Dollar is such a low risk that you can almost call it 'zero'. However, at some point given the stronger balance sheet in Hong Kong, one can easily see that it's going to rebound against the Dollar. I should point out that neither of these are investments; they're merely ways of holding savings. TGR: There may not be any gold-backed currencies but there are ways to get exposure to gold. What are some of those? Adrian Day: I think people should always start with Gold Bullion. I am always amazed at how many people own a bunch of tiny little Gold Mining stocks, but don't any bullion or own any of the big royalty, or more-established, companies. TGR: What are some ways you recommend people hold bullion? Adrian Day: There are many different ways to own it, and a lot depends on your timeframe for owning. Obviously, if you own bullion and store it, that's a very safe way – except there are costs to storage. We're perfectly comfortable buying the GLD, the ETF, which is extremely liquid and reflects the price of gold.
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| Silver Weekly Prices Advance 5.4% in US, 3.1% London Posted: 12 Jun 2010 05:13 AM PDT Silver prices rallied during the second week of June to recover most of their losses made during the month's first week. It was the biggest gainer of the precious metals.
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| Bullion Prices & Business Weekend Recap – June 12, 2010 Posted: 12 Jun 2010 05:13 AM PDT
Despite edging lower Friday, other precious metals registered weekly increases also, with silver and palladium jumping the most. Disappointing U.S. retails sales pressured stocks and oil Friday. Crude fell for the first time in four days, but still surged 3.2 percent for the week. U.S. stocks rallied in the final hour to pad weekly gains, with the Dow closing higher for the first week in a month. European stocks were mixed on Friday, but all rose for the week as well. (…) © CoinNews.net for Coin News, 2010. |
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| Ferdinand Lips Institute preserves gold advocate’s work on the Internet Posted: 12 Jun 2010 05:12 AM PDT 9p ET Friday, June 11, 2010 Dear Friend of GATA and Gold: The work of the late Swiss gold advocate, banker, economist, and philosopher Ferdinand Lips has been preserved by his daughter Barbara and his friends and students at the Lips Institute, whose Internet site has just become operational. Barbara writes that the Lips Institute hopes to make its Internet site a meeting place for "investors, mining companies, market specialists, journalists, opinion leaders, and institutions of learning from around the world that devote their attention to the most precious of metals." While Lips' health prevented him from attending GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, in August 2005, the speech he prepared for the conference, "Three Revolutions," was delivered by his business partner, J.P. Schumacher, and its text is among the documents archived at the Lips Institute site. The speech can be found here: http://lips-institute.ch/en/wp-content/uploads/file/speeches_pdf/Three_R… Lips' 2001 book "Gold Wars" mentions GATA's work prominently and information about it can be found here: http://lips-institute.ch/en/books/?thumbpage=1 The Lips Institute site is posted in English and German and you can find its home page here: CHRIS POWELL, Secretary/Treasurer * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| John Embry: 17 reasons to own gold Posted: 12 Jun 2010 05:11 AM PDT 8:40p ET Friday, June 11, 2010 Dear Friend of GATA and Gold: Sprott Asset Management in Toronto has put together an attractive two-page brochure with text written by Chief Investment Strategist John Embry outlining 17 reasons to own gold. It's in PDF form at the Sprott Internet site here: http://www.sprott.com/docs/Reports/reasons_to_own_gold.pdf CHRIS POWELL, Secretary/Treasurer * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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Our all-cash offer is 7.5 percent below an asking price that is already quite attractive as compared to recent sales, but, it's future sales prices that are of more concern to me – we had no intention of buying anything so soon, but the right house just happened to come along.
U.S. gold rose, marking a third straight week of gains, as bargain-hunters stepped in after the yellow metal fell 1.9 percent in two days from its | You are subscribed to email updates from Gold World News Flash To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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