Gold World News Flash |
- A Day Late -- And a "Flation" Short
- Spills and Chills
- Will Debt Forgiveness Work?
- ECB Shuts off Liquidity, Spanish Banks Scream Murder; Spain and Greece Will Both Default
- Gold and the Double Dip
- G20 Summit and Metals
- 4 Reasons Why the Fed Will Try Quantitative Easing
- Oil Industry Reputation Hit by Gulf Oil Spill, Survey Shows
- Crude Buffeted by Investor Worry, Chinese Growth Concerns
- UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt
- Cameron's Faux Austerity for Britain... Congress Declares War on Iran?
- Why I'm 100% Certain the Euro Will Fall Farther
- Russian Intelligence Found Gold Market Info 'Very Valuable' FBI Says
- Jim?s Mailbox
- Hourly Action In Gold From Trader Dan
- LGMR: Gold Slips 2.5% from "Important Top" as Global Stocks Slump
- Ugly
- Europe's banks are still on 'life support', BIS warns
- Debt Crisis Cannot Be Manipulated Away
- 10-Year Drops Below 3%; Investors Still Bullish on Treasuries
- Gold Price Sizzles As the U.S. Economy Fizzles
- When Will We Recognize the Bubble in Gold?
- Obama as Comedian
- The Vanishing Of The Gold Basis and...
- 25 Signs That Almost Everyone Is Expecting An Economic Collapse In 2010
- What Powers Your Google?
- Will We Have Inflation, Deflation, or Hyperinflation? Part 4 (Final)
- G20 Meddlers At It Again
- Gold, Stocks and Currencies
- “You can pay me now…or pay me later”
- “You can pay me now…or pay me later”
- Gold Prices Rise Slightly, Silver Falls
- $18 Million Rare Double Eagles Exhibit at ANA World’s Fair of Money
- The original dollar crisis, before central banks lost all interest in gold
- Imagine gold’s price if any of this cash had gone into actual metal
- Imagine gold's price if any of this cash had gone into actual metal
- Lawrence Williams: Central banks, investment houses probably rig gold
- Jim Rogers: Opportunities Are Now in Silver and Palladium
- The Long and Short of the Gold Market
- U.S. Stocks Plunge; S&P 500 Tumbles to Eight-Month Low
- Preparing for Next Big One?
- Fed Credit, Inflation and the Idiots in the Middle
- Gold: Chart Updates - Gold is a Counter Trade to Currency Risk
- Deflationary Crisis Part 2, Will This Time Be Different For Gold and Silver?
- Imagine gold's price if any of this cash had gone into actual metal
- Gold, Silver and Austerity versus Growth
- And The Nominees For The "Best Dive" Category Are Lionel Messi... And Gold
- As Long as Silver Doesn't Crash Through 18.00 nor Gold Through $1,218 They Will Keep Climbing
| A Day Late -- And a "Flation" Short Posted: 30 Jun 2010 01:02 AM PDT We've already had an obscene hyperinflation. Years from now, we might have another one. But the last hyperinflation needs to be "worked off" first. The debacle of late 2008-early 2009 was a dramatic harbinger of what will be a years-long process of unwinding debts, a scarcity of credit, and a generational change of attitudes among consumers who are learning quickly to distinguish between needs and wants. In short, it was a harbinger of an on-again, off-again DEFLATION; and one that will bedevil economies, markets and policymakers for a long time to come.
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| Posted: 30 Jun 2010 01:02 AM PDT The gold price has certainly been signaling that concern is still a growth area. This past week's new highs were preceded by some long anticipated gains to the yellow metal's senior producers. That means a firm move into the sector is taking place. There has been a trickle down into the sector's smaller stocks, but since this move is fear based it has been and will continue to be selective. There is still little reason to expect a broader summer rally, and diversification is still best focused on the other precious metals as far as we are concerned.
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| Posted: 30 Jun 2010 01:00 AM PDT It is clear after decades of failure the correct way to cure the malaise is not government amputation, monetary chemo or fiscal radiation, but letting free, natural markets do their healthy work to clear bad assets with creative destruction.
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| ECB Shuts off Liquidity, Spanish Banks Scream Murder; Spain and Greece Will Both Default Posted: 29 Jun 2010 07:01 PM PDT
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| Posted: 29 Jun 2010 05:56 PM PDT World leaders met at the G20 in Toronto to discuss how they will work to get the global economy moving again. If you're new to the global economic forums like these, you might think that they're actually productive. However, if you've been around long enough to follow them for a few years, you'd realize that politicians from the top 20 economic countries show up just to lay out their idealistic plans that they'll never really complete. World Banking Tax One of the top items at the G20 was the world banking tax that several countries, the US included, wants to impose on banks to insure against another financial crisis. The irony here is that it was the government, not the banks (this time), that created the financial mess that originated in US real estate. The government, in its infinite wisdom, decided to increase the availability of home loans to those people who quite frankly couldn't pay for them. They then tasked Fannie and Freddie to lower their stan...
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| 4 Reasons Why the Fed Will Try Quantitative Easing Posted: 29 Jun 2010 05:56 PM PDT While we were led to believe that the Fed would begin tightening upon recovery, new fears of a double dip have sparked the Keynesian clan into moving in the opposite direction. Soon enough, we believe, a new quantitative easing program will be unveiled. Bernanke is Afraid to Raise Rates Perhaps the most perma-bear of them all is Ben Bernanke, who after nine months straight of economic gains has yet to let loose on historically low rates. Mind you, the recovery is fragile, however in no time in history has virtually free money ever solved any problems. The most recent real estate bubble was a product of low rates, as was the bubble prior to the Great Depression, and so will be the next bubble. Knowing this, Bernanke is afraid more of the chance the US will double-dip or inflation will take hold than he is of absolutely destroying the dollar to the point where it isn't even worth the paper on which it is printed. After nine months of growth, one would ...
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| Oil Industry Reputation Hit by Gulf Oil Spill, Survey Shows Posted: 29 Jun 2010 05:56 PM PDT The Gulf oil spill has hit the reputation not only of BP but of the entire oil industry, including among those who favor increased use of fossil fuels as the main source of energy. Research firm Market Strategies International said its E2 Index, which measures consumer perceptions of the energy industry's economic contribution and environmental performance and credibility, showed the image of the industry has declined 25% in the past six months, from 40 in December to 30 in June. "While the oil spill was unique to BP, it has caused consumers to question whether a similar incident could happen to other companies," said Jack Lloyd, vice president of Market Strategies, which is based in the Detroit suburb of Livonia. "The entire industry will be under intense public scrutiny for the foreseeable future." The spill resulting from the accident at BP's Deepwater Horizon will play a role in determining oil companies' business strategies and their marketing messages, ...
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| Crude Buffeted by Investor Worry, Chinese Growth Concerns Posted: 29 Jun 2010 05:56 PM PDT courtesy of DailyFX.com June 29, 2010 02:39 PM A cumulative drop in risk appetite and building concern over the future of growth would send the energy market tumbling through the European and US sessions Tuesday. For the US-based WTI crude futures contract, the day’s performance was particularly ugly. North American Commodity Update Commodities - Energy Crude Buffeted by Investor Worry, Chinese Growth Concerns Crude Oil (LS NYMEX) - $75.69 // -$2.56 // -3.27% A cumulative drop in risk appetite and building concern over the future of growth would send the energy market tumbling through the European and US sessions Tuesday. For the US-based WTI crude futures contract, the day’s performance was particularly ugly. A 3.3 percent tumble on the day would pull the commodity back from a brief attempt at six-week highs. And, if there had not been a technical precedence set at $75.50/00, the highlights for performance could have turned out far worse. Nonetheless, the...
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| UK ConLib Government to Use INFLATION Stealth Tax to Erode Value of Public Debt Posted: 29 Jun 2010 05:56 PM PDT The Chancellor of the Exchequer, George Osborne hit the reset button on the UK economy by delivering the most radical budget of the past 30 years that has sought to cut an extra £40 billion from Britains annual budget deficit by 2014-15 which is on top of ALL of Labours March 2010 budget cuts and tax rises of £73 billion that the coalition left intact. The cuts totaling a withdrawal of £113 billion from the economy will be phased in by 2015-16 and by then total about 7.5% of GDP which is a huge amount that is deemed necessary to divert Britain from its current path towards bankruptcy that Labour had put it firmly upon as a consequence of running an annual budget deficit of 12% of GDP. Eventually an annual £113 billion (7.5% of GDP) being sucked out of the economy will undoubtedly have a significant impact on the economy thus resulting in lower economic growth than originally forecast in my UK Economic growth forecast of December 2009 (31 Dec 2009 - UK Economy GDP Grow...
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| Cameron's Faux Austerity for Britain... Congress Declares War on Iran? Posted: 29 Jun 2010 05:56 PM PDT Cameron's Faux Austerity for Britain Tuesday, June 29, 2010 – by Staff Report David Cameron David Cameron: 'The world doesn't owe us a living ... Britain has no automatic right to prosperity, David Cameron (left) has said, declaring: "The world doesn't owe us a living." The Prime Minister said many people are under the "delusion" that just because the UK has historically been one of the richest countries on earth, it will always remain so. Only if we "reboot and rebuild" the UK economy can the country's future prosperity be assured, he said. Mr. Cameron told business leaders in London that Britain has no automatic right to prosperity. Mr. Cameron used a speech to business leaders in London to argue that the spending cuts and other changes his Government is planning are not discretionary political choices but essential economic moves to stop the country falling. Government is planning are not discretionary political choices but essential economic move...
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| Why I'm 100% Certain the Euro Will Fall Farther Posted: 29 Jun 2010 05:56 PM PDT By Tom Dyson Tuesday, June 29, 2010 I call it my "broken dam" indicator… Imagine trying to dam a powerful river. You build the thickest dam you can afford. For a while, the dam holds the water back and a reservoir forms. As the reservoir gets bigger, the water's pressure grows. Eventually, the weight of the reservoir exceeds the strength of the concrete, and the dam starts crumbling. Sooner or later, the reservoir ends up in the valley… along with your dam. Governments build dams in the financial markets all the time. They use currency controls to prevent citizens from taking money out of the country. They hold interest rates at low levels to encourage consumption. They order pay freezes to stop wage inflation. They use subsidies to prop up failing industries. You can find thousands of examples of failed government dams. But my favorite example is from 1992, when a British government dam failed in the currency markets… Britain had joined a ...
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| Russian Intelligence Found Gold Market Info 'Very Valuable' FBI Says Posted: 29 Jun 2010 05:56 PM PDT Gold didn't do much in either Far East or London trading on Monday. But, about an hour after Comex trading began, a buyer worthy of the name showed up... and gold tacked on about ten bucks in an hour. The top of this rally [$1,263.90 spot] proved to be the high of the day. Then the dealers began to sell, pulled their bids [twice]... and very quickly gold got clocked for almost $30... as gold 'fell' to its low of the day of $1,234.70 spot around 1:15 p.m. in New York. After that, gold didn't do a thing... and closed for close to its low of the day. Volume was pretty heavy. Silver's pattern was very similar... except it endured three different bouts of 'selling' during the New York session... on its way to its low of the day. Like gold, silver's high was around 10:45 a.m. Eastern time... and its low also came at 1:15 p.m... shortly before Comex trading ended. The New York high was $19.27 spot... and the low was $18.64 spot, a 'trading range' of 63 ...
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| Posted: 29 Jun 2010 05:56 PM PDT View the original post at jsmineset.com... June 29, 2010 09:31 AM Dear Jim, As I’m sure you are aware, there were ten people arrested in Boston and New Jersey as Russian spies the other day. They have been charged with "Conspiracy to Act as Unregistered Agents of a Foreign Government." As you can see from the Justice department document on page 34, paragraph 81c. Please note that there seems to be an interest in Gold amongst those charged with spying for Russia. Quoted here: "On a number of other occasions, the SVR specifically indicated that information collected and conveyed by the New Jersey Conspirators was especially valuable. Thus, for example, during the summer and f a l l of 2009, CYNTHIA MURPHY, the defendant, using contacts she had met in,New York, conveyed a number of reports to Center about prospects for the global gold market. In October of 2 0 09, the SVR responded: "Info: on gold – v. useful [sic], i t was sent directly (after due adaptation) to Min[.] o...
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| Hourly Action In Gold From Trader Dan Posted: 29 Jun 2010 05:56 PM PDT View the original post at jsmineset.com... June 29, 2010 10:11 AM Dear CIGAs, Yesterday (Monday) we had a carbon copy repeat performance of the previous Monday's price action in gold – a move resulting in a bearish downside reversal day on the price charts. Today (Tuesday) we have a carbon copy repeat performance of the previous Tuesday's price action – a move lower in follow through selling met by strong buying that took price well off the session low and forced some of the shorts out of the market. Clearly bears are being short-circuited in their desire to drive a significant number of speculative longs out of the gold market. The reason, in my opinion, is very simple – gold is functioning in its historic role as a safe haven and as a currency of last resort due to ongoing, legitimate concerns over the long term welfare of the current monetary system. What we are witnessing is a first rate battle between technicians and fundamentalists. The bullion banks have always relied on th...
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| LGMR: Gold Slips 2.5% from "Important Top" as Global Stocks Slump Posted: 29 Jun 2010 05:55 PM PDT London Gold Market Report from Adrian Ash BullionVault DATE LINE Gold Slips 2.5% from "Important Top" as Global Stocks Slump, "Economic Blinders" Come Off THE PRICE OF GOLD in wholesale dealing fell further in London on Tuesday morning, extending its drop to almost 2.5% from yesterday's near-record high, as world stocks sank and commodity prices also dropped. Government bonds rose, pushing 10-year US Treasury yields down towards 3.0%. Both Sterling and the Euro fell vs. the Dollar and Yen, but gold priced in British Pounds failed to benefit, dropping to a 5-week low of £818 an ounce. "Gold is testing trend-line support at $1233," says a note from Mitsui's London dealers, "as the yellow metal has yet to see any benefit from the return to risk aversion." "It seems that gold is not in a position to maintain these record-high prices," says Angela Prunecchi at Italian bullion dealers Italpreziosi. Recording "another top" above $1260 an ounce on Monday "w...
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| Posted: 29 Jun 2010 05:55 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here June 29, 2010 08:52 AM While it’s not unusual for a summer swoon in the junior resource market, it’s especially ugly at the moment. For weeks we saw a no bid market cause erosion that fed on itself. Now, we’re seeing selling into a no bid market that’s greatly accelerating the erosion. Part of the recent selling is likely coming from the fact it’s year-end for many Canadian brokerages June 30th. With a Canadian holiday Friday and U.S. on Monday, there’s little incentive to be a buyer at the moment. Overall world stock market weakness doesn’t help either. I continue to stay narrow in my focus with suggesting one being over-weighted only in precious metals plays. I’m currently gathering updates from Grandich client companies and hope to provide updates as July takes hold. Our office will be closed from July 1st to July 5th. [url]...
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| Europe's banks are still on 'life support', BIS warns Posted: 29 Jun 2010 05:55 PM PDT June 28, 2010 12:27 PM - Europe's banks have yet to come clean over bad loans and may struggle to refinance short-term debt unless the region's bond crisis subsides soon, the Bank for International Settlements (BIS) has warned. Read the full article at the Telegraph......
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| Debt Crisis Cannot Be Manipulated Away Posted: 29 Jun 2010 05:55 PM PDT View the original post at jsmineset.com... June 28, 2010 12:25 PM Dear Friends, If the market for gold had not done its runaway/runaway common to overleveraged long morons, it would have broken out of the neat cup and handle formation going on to $1650. It will definitely break out of that formation. The short term bullies that manipulated today’s market cannot manipulate the reality of the debt crisis away. Today was the do or die takedown in gold by the mega hedge fund traders using the gold banks as beards for maximum effect. It was that because of the cup and handle formation. I know because I used to do the same thing on the other side. Back in the 70s when the Middle East was the major buyers of gold they used a certain German bank as their broker constantly. When I wanted to run a large short position into oblivion, I used the same bank as buyers that represented the Middle East. Nobody wants to buy or sell, only manipulate price, when they bid ten times what the off...
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| 10-Year Drops Below 3%; Investors Still Bullish on Treasuries Posted: 29 Jun 2010 05:47 PM PDT Wall Street Post Game submits:
With fear in the world markets and the euro, investors are turning to “safe” assets such as Treasuries. During periods of high volatility and economic uncertainty, we see treasuries as attractive investments because of the low risk profile. Dropping below 3% could be a sign to investors that we are seeing a real meltdown in economic activity, however, this could just be a signal of temporary flight to quality as short term uncertainties ravel the markets. An extremely poor June Consumer Confidence Index was part of the problem, as the S&P dropped 3.1% to 1041, a new low for 2010. The sell-off was also propelled by the fact that the Conference Board sharply revised lower its leading indicator on Chinese economic growth, signaling fear that global growth may be limited. Complete Story »
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| Gold Price Sizzles As the U.S. Economy Fizzles Posted: 29 Jun 2010 05:38 PM PDT
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| When Will We Recognize the Bubble in Gold? Posted: 29 Jun 2010 05:20 PM PDT Doug Short submits: Here is a series of monthly close charts of the Nikkei 225, the S&P 500 and gold. This series also includes an overlay chart with the three peaks aligned. In retrospect, most people readily recognize a dramatic rise in the Nikkei and S&P indexes as bubbles — especially acceleration during the decade prior to the peaks. Complete Story »
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| Posted: 29 Jun 2010 05:19 PM PDT  Michael Panzner submits: He's made a boatload of mistakes and has squandered every bit of the political capital he came into office with, but at least our 44th president knows how to keep us entertained with his fabulous sense of humor. Just listen to what he had to say in a speech he made after meeting with Fed Chairman Ben Bernanke:
Complete Story »
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| The Vanishing Of The Gold Basis and... Posted: 29 Jun 2010 05:00 PM PDT
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| 25 Signs That Almost Everyone Is Expecting An Economic Collapse In 2010 Posted: 29 Jun 2010 04:59 PM PDT
The following are 25 signs that almost everyone in the financial world is expecting an economic downturn during the second half of 2010.... #1) The Conference Board's Consumer Confidence Index declined sharply to 52.9 in June. Most economists had expected that the figure for June would be somewhere around 62. To get an idea of how bad this is, the index was at 100 back during the baseline year of 1985. #2) Major banks are being instructed to hoard cash in preparation for the next financial crisis. #3) French bank Societe Generale is forecasting that gold could reach $1,430 an ounce in the third quarter of this year due to fears of a double-dip recession. #4) Paul Krugman of the New York Times declared in a recent column that we are about to enter "the third depression". #5) According to one recent poll, about eight out of every 10 Americans expect the Gulf of Mexico oil spill to damage the U.S. economy and drive up the cost of gas and food. #6) Mark Zandi, chief economist of Moody's Analytics, is not optimistic about the chances of avoiding another recession.... "There's an uncomfortably high probability that we slip back into recession." #7) The U.S. Department of Agriculture is forecasting that the number of Americans on food stamps will increase to 43 million in 2011. #8) George Soros claims that a European recession in the coming months is "almost inevitable". #9) Kevin Giddis, the Managing Director of Fixed Income at Morgan Keegan says that a lot of people are making some really large financial bets that a recession is on the way.... "There is big money making big bets that at a minimum we we'll have a recession if not a depression that could last for years." #10) The Center on Budget and Policy Priorities recently said that U.S. states in fiscal 2011 could be facing the worst budget situation that they have experienced since the economic downturn began in 2007. #11) Federal Reserve Chairman Ben Bernanke is publicly saying that the U.S. unemployment rate is quite likely to remain "high for a while". #12) The National League of Cities is warning that large numbers of cities across the U.S. will be facing horrible economic conditions over the next couple of years.... "City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions. These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts." #13) According to the Wall Street Journal, debates have already begun inside the Federal Reserve about what to do in the event of a "double-dip" recession. #14) In May, sales of new homes in the United States dropped to the lowest level ever recorded. The truth is that the American people know economic hard times are coming and so they aren't running out and buying expensive new homes that they can't afford. #15) Mike Whitney says that without more "stimulus" from the federal government a recession by the end of 2010 is extremely likely.... "Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010." #16) One recent poll found that 76 percent of Americans believe that the U.S. economy is still in a recession. #17) Richard Russell, the famous author of the Dow Theory Letters, is not mincing words about what he believes is headed our way.... "Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him." #18) The Bank of International Settlements said in its annual report that major banks on both sides of the Atlantic Ocean continue to remain "highly leveraged and still appear to be on life support". #19) Mish Shedlock recently raised eyebrows by openly proclaiming that "an economic depression is here". #20) Bob Chapman of the International Forecaster is very pessimistic about the state of the world economy as we head into the second half of 2010.... "There is still no question in our minds that Greece was a setup to lead to a deflationary collapse later and the Greek people refused to listen. As a result it is now apparent that Greece is even worse off than the elitists imagined. We do not see European bailouts going any further. The result is the US and UK will follow. Financial Europe is history. You should all keep in mind that this is child's play. Wait until England and the US go down, perhaps before the end of the year." #21) An article on Bloomberg's website says that 46 U.S. states are facing a "Greek style" financial crisis. #22) Charles Cooper at Oriel Securities says that worries about the global economy right now are actually very good for the price of gold.... "Debt on government balance sheets and worries that the world could be heading towards a double-dip recession are driving the gold price higher." #23) Richard Suttmeier recently wrote an article for Forbes magazine in which he predicted that we are headed for another dramatic decline in housing prices.... Home prices will decline again with risk of another 50% down to get house prices back to levels of 1999 / 2000. #24) University of Maryland professor Peter Morici is warning that the decision by European governments to slash their budgets makes the prospect of another recession much more likely.... "Europeans cutting their budgets now could thrust the global economy into a double-dip recession." #25) John P. Hussman, fund manager of Hussman Strategic Total Return and Hussman Strategic Growth, has issued a full-fledged recession warning: "Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn." So in light of all this, what should we all do? We should all start preparing for difficult times. Now is a great time to get out of debt, to reduce expenses, to develop additional streams of income and to start storing up food and supplies for when things really fall apart. After all, you don't start preparing once the storm has already arrived. You start preparing the moment that you see the first signs of trouble on the horizon. There is no excuse for not getting yourself prepared. The signs that we are headed towards an economic nightmare are all around us. Do what you have to do for youself and for your family.
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| Posted: 29 Jun 2010 04:13 PM PDT What do search engines and wind energy have in common? That's the question a lot of investors were asking earlier this month, when Google made an almost US$40 million investment into NextEra Energy Resources, a North Dakota wind energy firm. The simple answer: more than you think. It's not surprising that the Internet search-engine superstar needs energy. Companies like Google own massive computer frameworks, known as server farms, to store all that digital data floating around in cyberspace. While Google is quite hush-hush about how many computers it owns, estimates put it at about 1,000,000 servers (almost 2% of the world total), and an enormous amount of power is needed to keep them running constantly. And as cyber-information grows - almost 24 hours of video footage is uploaded onto YouTube every minute - more and more computers are required to store and distribute it. But where does their power come from? Most server farms are located near coal-fired generating plants. Good for efficiency, but that adds up to a pretty big carbon footprint. Naturally, this has environmental groups fuming and lobbying the corporations for clean energy alternatives. Given Google's avowed sensitivity on this issue, investing in wind turbines in North Dakota makes good public relations sense. However, it is usually the company's philanthropic arm, Google.org, that handles such good-citizen initiatives. Thus the unprecedented move to make a first-time direct investment into NextEra Energy suggests that Google is expecting something further. It seems logical to assume that the company's motivation also involves saving money by slashing its dependence on coal-fired generators. After all, when your electric bills approach that of a small country, it's hard not to jump on a company that could potentially produce enough power to light up 55,000 homes. But if this is, in part, an exercise in cost-cutting, Google made a big mistake: it chose the wrong renewable energy. The main problem with wind farms: they don't work when it's not windy. But that's not all. Wind energy is plagued by high capital costs, a weak power transmission system, and low output, making its success heavily dependent on government subsidies. Load factors for wind energy - that is, the difference between how much power a generator can produce and how much it actually produces, which determines how much money a utility will make - are also quite low. The large physical footprint - the amount of land required to build wind farms - is another downside, as is the threat they pose to birds and the noise pollution they generate. Add this all up and you've got the biggest loser when it comes to going green. In reality, the best renewable energy bet Google could make, especially in the United States, is on geothermal. Leaving everything else aside, geothermal beats wind energy on the most important factor: it is not dependent on weather. That means there is no need for backup power generation facilities, something wind farms must have for the days when the turbines won't turn. Nor are government subsidies absolutely necessary for geothermal energy; they're more of an added bonus. And geothermal power plants require the least amount of land: they can hum away contentedly even in the middle of farmland or a park. Geothermal also wins on the numbers, with the highest load factor of all renewable energies and the biggest profit margin. Take a look at the cost breakdown of renewable generating technologies in the U.S. - it's clear that geothermal is miles ahead:  Perhaps the reason Google decided to go with wind energy this time is because it gave geothermal a chance in the past. Two years ago, through Google.org, the company became the biggest investor in enhanced geothermal research, beating even the United States government. Unfortunately, that time around, Google picked the wrong company. Google invested US$6.25 million into AltaRock Energy in August 2008, to help the company make a success of its promising Geysers project in northern California. AltaRock was using the latest technology - Enhanced Geothermal Systems (EGS) - in an attempt to harness some of the energy locked far beneath the earth's surface. As Google discovered, though, making a sound investment is not as simple as picking a company just because it has a great project location and the finest in tech. A host of pitfalls faces any geothermal developer - including inexperienced crews, insufficient financial backing, and the lack of a good power purchasing agreement. But most formidable of all are the challenges of very deep drilling. While EGS represents a breakthrough, it's still new, and it's tricky to use. To properly exploit its potential, companies need to learn how to drill that deep, and to do so despite the hot corrosive fluids and unfriendly intervening layers of rock that can ruin a well in short order. And as if that weren't enough, users have to work extra cautiously. Geothermal activity is generally found around seismic fault lines, and fracturing deep rocks using hydraulic pressure has linked EGS to earthquakes. As AltaRock Energy (and its investors) found out, it's going to take more than just fat corporate and government checks and tweaks to conventional techniques for EGS projects to work. The Geysers project came to an abrupt halt just over a year after drilling began. Barely a third of the well's planned 12,000 ft depth had been reached before drillers encountered a layer of fibrous rock that caused the holes to collapse. Renewable energy is essentially still in its infancy, with plenty of barriers to surmount. At the same time, there's no mistaking politicians' growing desire to climb onto the bandwagon. Which means more and more companies are jumping at the chance to join in. But this is still relatively unexplored territory, and the market has some hard lessons yet to teach. Not every company... or idea... is cut out for this. It would be wrong to say wind energy doesn't have a future, because it does - a very distant and windy one. One that won't be materializing anytime soon, at least not until the capital costs of wind development drop and transmission techniques improve. Geothermal isn't easy. The Geysers failure demonstrates that. But it's proven, it's cost effective, and it runs 24/7... so for now, it's our favorite renewable energy. Marin Katusa
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| Will We Have Inflation, Deflation, or Hyperinflation? Part 4 (Final) Posted: 29 Jun 2010 04:11 PM PDT
From The Daily Capitalist
Part 4 of 4 What is Money Supply Doing Now? Money supply will tell you if we are headed for inflation or deflation. If we look at the rates of change of M1 or Austrian True Money Supply (TMS), they are declining. In fact, M1 and TMS appears to have peaked in 2009 and have been declining on a year-over-year basis ever since. On an absolute basis, as shown previously, M1 growth is flattening. These two charts below show the year-over-year percentage change in money supply.
What Will the Fed’s Options be in a Double-Dip Economic Decline? This is the main point. If, as I have been saying, the economy declines in the second half of 2010, what will the Fed do? Let me paint a scenario. In any scenario with declining economic growth, unemployment will rise. If unemployment at the narrowest measure is now 9.7% and at the broadest measures (U-6) is 16.9%, rising unemployment will become politically unacceptable to the Obama Administration. I believe the politicians will first take Paul Krugman’s advice and extend existing stimulus programs and create new ones to spur spending. All the talk about fiscal sanity and deficit warnings will be forgotten as politicians on both sides of the aisle panic. Look for further extensions of the home buyer tax credit program, and other programs that politicians believe will help businesses in their districts. Cash for [Your Industry Here] will be the byword. It will add to an already huge federal debt and will result in more wasteful spending and non-viable short-term results. On top of all this, the politicians will hammer Bernanke to create jobs, which is one of the Fed's mandates. But how can he do that? He will try to inflate. The Fed has limited options in such a case. They can’t reduce the Fed Funds rate any further and they can’t force banks to lend. It is likely that banks will further restrict credit as the economy declines. I think their only viable option is to use Open Market Operations (OMO) to inject new money into the economy. The next question is: what will they buy? From January, 2009 to April, 2010, the Fed acquired $1.25 trillion dollars of mortgage backed securities (MBS) through OMO purchases. The only problem is that it didn’t do much for the economy. Most of the OMO money pumping has been going into the hands of the big financial institutions which has been driving the financial markets. It is no coincidence that Goldman Sachs had 63 perfect trading days in Q1. New York restaurants are recovering nicely. There is a theory called the Cantillon Effect which says an increase in money supply doesn’t affect all prices equally: money flows initially into some assets, tends to stick there, and the inflationary effect is borne by later by consumers who get no benefit from the new money, only the burden of higher prices. Such an effect may have occurred when the Fed bought MBS from dealers which resulted in cleaner balance sheets and high profits for the big banks and left consumers with slightly higher prices. But I recognize that this idea is conjecture on my part. But, as I pointed out above, (i) OMO money pumping doesn’t have the same multiplier effect as lending by banks, and (ii) credit is still declining. There are two other asset purchase choices the Fed may consider in its Open Market Operations. Neither alternative is good: Alternative No. 1. Buy bad CRE loans (non-MBS) directly from regional and local banks. If it buys CRE debt from smaller banks, it would compound the problem it already has with MBS purchases. That is, it is unlikely they could sell these assets for what they paid. The positive effect, in the Fed's eyes, is that banks would more quickly repair their balance sheets and regain financial health. This would then allow them to raise needed Tier 1 capital and commence lending to viable businesses (this is a big “if”). The Fed recognizes, as Monetarists, that they need to get the smaller banks lending again to spur the economy and create inflation. This of course ignores the “moral hazard” caused by bailing out troubled banks. But I don’t think there is a lot of political sentiment to allow massive bank failures. And the political pressure on the Fed to “do something” will be intense. Setting all this Monetarist-Keynesian folly aside, the question still remains: if these banks are artificially restored to health, would that lead to economic expansion? In my opinion it will lead to a “bomb-bust” cycle (economic stagnation and inflation). Alternative No. 2. Buy Treasury paper which would have the effect of monetizing Federal debt (the government prints currency to pay for its own debts). The monetization of federal debt on a large scale basis would certainly increase the money supply. The downside is that it would cause greater economic distortions than if they bought bank CRE debt because the effect would be to fund wasteful government projects. Further they still have the problem of getting banks to lend and if they just buy Treasury paper from these small banks, they will sock the cash away at the Fed as excess reserves. Will Inflation Be the Effect of the Fed’s Action? In either alternative or a combination of the two, we would have inflation because money supply would increase. How much inflation depends on how much cash is injected into the system. Such inflation would eventually cause another artificial business cycle that would further damage the economy by destroying more capital as the new money is misdirected into businesses that would not be otherwise viable but for the effects of inflation. This is called “malinvestment.” We are presently suffering the results of malinvestment in real estate assets. This new cycle will be less of a boom and more of a bomb. This is what happened in the 1970s when the CPI went sky high yet economic activity stagnated. Stagflation was the term devised to describe it. The problem is this: how many times can you destroy capital before you have jeopardized the ability of investors and entrepreneurs to create new profitable businesses? Real wealth as I discussed before, is not a piece of paper. It is goods produced that are not consumed. (See my article, “Money: A semi Fictional Fable.”) Money is just a way of holding wealth until you wish to consume something. If I am a factory owner producing silicon chips for Apple, and I save some of my profits rather than spend all of it, those savings are real capital. It is difficult in our complex economy to measure “real capital.” Some Austrians believe a decline economic activity indicates a decline of real capital. I would agree that is probably the case, and, I would agree the last two cycles have been destructive of real capital. I do know that more pieces of green paper will only result in malinvestment (the destruction of more real capital) and rising prices. When will we see inflation? This is where I believe the deflationist argument fails. The deflationists believe we will have years of deflation because of the credit freeze. Banks are still loaded with bad debt and viable borrowers are difficult to find. While I understand the similarities with the Japanese experience (massive fiscal stimulus, zero interest rate policy, low inflation, and stagnation) I believe the situation will be different here. That difference is that we are cleaning up our mess whereas the Japanese, perhaps because of cultural reasons, let bankrupt (zombie) companies and banks stay alive. This tied up capital in unprofitable businesses (malinvestment), and new capital was not able to be directed to entrepreneurs and profitable companies. While we may be going at it slowly, America has a rich tradition of failure, foreclosure, and bankruptcies which acts as a cleansing mechanism to rid the economy of malinvestment. This is what Joseph Schumpeter referred to as “creative destruction,” or the process by which capitalism corrects its mistakes. This process is occurring here, but the problem is that the process is being slowed down by government policies that prevent bankruptcies (mark-to-make believe, extend and pretend, delay and pray, and TARP, TALF, Cash for Clunkers, and housing subsidies). I don’t agree with the deflationists that deflation is a decline in real estate asset values. I believe the deflationists conflate deflation and deleveraging. I agree with the deflationists that deleveraging and the decline in real estate values has and will limit economic activity because it has suppressed bank credit, but it isn’t deflation. Further, as pointed out by Austrian economist Bob Murphy, we haven’t seen deflation yet, or at least it has not been reflected in the CPI. In fact, he says, we haven’t had deflation since the Great Depression. At some point the Fed's efforts to increase money supply will be effective. It is difficult to predict when that will be. I think we are seeing current declines in money supply growth as a response to the Fed’s cessation of MBS purchases. It is possible that we may go into negative territory which would be deflation, but, with evidence of a double-dip economic decline, the Fed will do everything it can to re-inflate and I think they will succeed. This time the result will be stagnation and inflation. Will We Have Hyperinflation? Is hyperinflation possible in America? The proper question to ask is if it is probable. To that question I would say no. Hyperinflation would result in the destruction of our monetary system and Ben Bernanke and just about everyone at the Fed and the Administration’s economic advisors understand this quite well. I believe they understand the mechanism of printing money as the cause of hyperinflation. I am also aware of the implications of runaway Federal debt and the political choices the government has to pay it: higher taxes and/or inflation. The third method to pay it would be a thriving economy caused by a reduction of government’s heavy hand, but free market capitalism is out of favor right now. To prevent runaway inflation the Fed would raise interest rates, increase reserve requirement, and sell assets to stabilize money supply. The hit to the economy would be worth the risk. This is essentially what Volcker did back in 1979-1980. If it really got rough, price and wage controls would be instituted on a temporary basis to cool things down. I am aware of the implications of such controls and the massive price distortions they cause, as is Mr. Bernanke. But it would politically acceptable on a temporary basis. That famous Republican, Richard Nixon, did this in 1971. We all understand that such controls only further distort the economy because only market prices enable us to make economic decisions, which is why such controls would be short lived. Summary
For those of you who wish to read the entire article as one downloadable PDF, please go here.
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| Posted: 29 Jun 2010 04:09 PM PDT Dow went nowhere yesterday. Gold fell $17. "The doctrine of regulation and legislation by 'master minds,' in whose judgment and will all the people may gladly and quietly acquiesce, has been too glaringly apparent at Washington during these last ten years. Were it possible to find 'master minds' so unselfish, so willing to decide unhesitatingly against their own personal interests or private prejudices, men almost godlike in their ability to hold the scales of justice with an even hand, such a government might be to the interests of the country; but there are none such on our political horizon, and we cannot expect a complete reversal of all the teachings of history." A friend sent the above quote with an invitation to guess the speaker. We would not have guessed. It was Franklin Delano Roosevelt, in 1930, when he was still governor of New York. Which goes to show that the people who rule us are no dopes. It also provides more evidence of our dictum: people come to think what they must think when they must think it. As last as 1930, Roosevelt was still among the living. He campaigned for president on a conservative platform, arguing that Herbert Hoover was a spendthrift. Roosevelt pledged to balance the budget. Was he a liar? Probably no more than anyone else. Between being governor of a state and president of the US, his thinking changed. He found that the times no longer called for it. When the Great Depression began, people thought it was just a 'recession.' They thought the economy would recover quickly. It was only when that didn't happen that the voters demanded the government 'do something' to bring the depression to an end. Actually, the government had already done more than enough. It had practically caused the boom of the '20s...and then the depression of the '30s all by itself. First, the head of the Federal Reserve at the time had decided to help out his English friends by delivering a 'coup de whisky' - lower interest rates - to the financial sector. Stocks soared. Then, after the bubble burst, the Hoover administration intervened heavily in the markets, refusing to allow the economy to adjust quickly. Not only that, but two errant members of Congress - Smoot and Hawley - set off a trade war, putting further pressure on international commerce and economic growth. And once again, the feds are meddling. The New York Times:
Stabilize public debts by 2016? By then, the US and other major economies will have more government debt than GDP. It is bound to be too late for many of them. And even this modest goal presumes that economies are able to grow faster than their debt - in real terms. When you get debt equal to 100% of GDP, you're over a barrel. If interest rates were to return to the double digit levels of the '70s, it could cost more than 10% of GDP just to pay the interest. That's not going to happen. Things fall apart before they get that far out of whack. Something else will have to happen. But what? Don't know... But we can take a guess. The 'recovery' won't work. Instead, as in the economy of the '30s, the feds will keep trying to help it. They will come to think what they need to think - that they need to spend more and more...until they have spent too much. Maybe they already have. ******************** Greek Hideway At last...a way out of the debt mess! Greece is raising money by selling islands. The Guardian reports: "There's little that shouts "seriously rich" as much as a little island in the sun to call your own. For Sir Richard Branson it is Neckar in the Caribbean, the billionaire Barclay brothers prefer Brecqhou in the Channel Islands, while Aristotle Onassis married Jackie Kennedy on Skorpios, his Greek hideway. Now Greece is making it easier for the rich and famous to fulfill their dreams by preparing to sell, or offering long-term leases on, some of its 6,000 sunkissed islands in a desperate attempt to repay its mountainous debts. The Guardian has learned that an area in Mykonos, one of Greece's top tourist destinations, is one of the sites for sale. The area is one-third owned by the government, which is looking for a buyer willing to inject capital and develop a luxury tourism complex, according to a source close to the negotiations. Potential investors also looking at property on the island of Rhodes, are mostly Russian and Chinese. Investors in both countries are looking for a little bit of the Mediterranean as holiday destinations for their increasingly affluent populations. Roman Abramovich, the billionaire owner of Chelsea football club, is among those understood to be interested, although a spokesman denied he was about to invest. Greece has embarked on the desperate measures after being pushed into a €110bn (&ound;90bn) bailout by the EU and the IMF last month, following a decade of overspending and after jittery investors raised borrowing costs to unbearable levels. The sale of an island - or convincing a member of the international jet-set to take on a long-term lease - would help to boost its coffers. The Private Islands website lists 1,235-acre Nafsika, in the Ionian sea, on sale by private interests for €15m. But others are on offer by private owners for less than €2m - less than a townhouse in Mayfair or Chelsea. Some of the country's numerous islands are tiny which could barely fit a single sunbed. Regards, Bill Bonner
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| Posted: 29 Jun 2010 04:01 PM PDT We had quite a day on Tuesday. Gold started out getting smashed, then recovered. The recovery may have been due in part to the Stock Indices crashing. Even with a $20 recovery from its lows, I expect we'll see lower prices in the future.
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| “You can pay me now…or pay me later” Posted: 29 Jun 2010 03:51 PM PDT By Jeff Nielson, Bullion Bulls Canada Occasionally, a television commercial does an exquisite job of seizing upon some time-tested cliché and then uses an image which perfectly illustrates the principle in question. An example of such a commercial is the ad for Fram oil-filters, which (if memory serves me correctly) dates back to the 1970′s, and ran for many years.
For the benefit of younger readers, and older readers who do not recall that commercial, I will briefly summarize it. A mechanic is standing in a garage, in front of a car which is up on a hoist. In his hand, he holds a Fram oil-filter. He holds the oil-filter up, and says, "You can pay me now…or pay me later" (as he gestures to the car on the hoist).
There are several ways we can characterize the principle being cited. One way is to say that we can behave prudently today (by buying a new oil filter for our car), or face catastrophe tomorrow (be forced to pay for an engine overhaul). An economic characterization of the principle would be to say that we can incur a small expense today in order to avoid a major expense tomorrow.
However we choose to frame the principle, one fact is clear: many members of our species never follow this advice, while almost all of us stray from this wisdom at least on occasion. Indeed, this particular human failing is so common that we have a word for it: procrastination. As a consummate procrastinator in my younger days, I fully understand this form of human weakness.
We start with a task we must perform or a problem which we know we must solve – but which we would rather avoid, due to some level of unpleasantness which we associate with the matter in question. In a moment of weakness, we make the mistake of asking ourselves a question: if I wait to deal with the matter until 'tomorrow', will it make much of a difference?
This creates a dynamic which quickly turns into a vicious circle. The reason why procrastination is such a debilitating flaw is that most problems are not so urgent that they absolutely must be attended to today. Thus, when we procrastinators ask ourselves that rhetorical question, we already know the answer: "no, waiting one more day will not make a difference."
The big problem with that process is that many situations deteriorate at a very gradual rate. This means that if each day we ask ourselves "can I wait one more day?", we will be able to answer that question affirmatively for a very long time. Meanwhile, the cumulative deterioration of our situation(s), caused by many days (or years) of delay can be much more serious. Few forms of cancer can make us noticeably more ill over the span of only a day, yet we are all well aware of the cumulative destructiveness of that disease.
Most economic problems evolve in a similar manner. If we deal with the problem promptly, we may escape any adverse impact at all, while if we wait too long, the problem can easily become 'fatal'. As individuals, the maturity gained by the passage of years (and often many years) eventually teaches us to avoid the vicious circle of procrastination. More articles from Bullion Bulls Canada….
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| “You can pay me now…or pay me later” Posted: 29 Jun 2010 03:51 PM PDT By Jeff Nielson, Bullion Bulls Canada Occasionally, a television commercial does an exquisite job of seizing upon some time-tested cliché and then uses an image which perfectly illustrates the principle in question. An example of such a commercial is the ad for Fram oil-filters, which (if memory serves me correctly) dates back to the 1970′s, and ran for many years.
For the benefit of younger readers, and older readers who do not recall that commercial, I will briefly summarize it. A mechanic is standing in a garage, in front of a car which is up on a hoist. In his hand, he holds a Fram oil-filter. He holds the oil-filter up, and says, "You can pay me now…or pay me later" (as he gestures to the car on the hoist).
There are several ways we can characterize the principle being cited. One way is to say that we can behave prudently today (by buying a new oil filter for our car), or face catastrophe tomorrow (be forced to pay for an engine overhaul). An economic characterization of the principle would be to say that we can incur a small expense today in order to avoid a major expense tomorrow.
However we choose to frame the principle, one fact is clear: many members of our species never follow this advice, while almost all of us stray from this wisdom at least on occasion. Indeed, this particular human failing is so common that we have a word for it: procrastination. As a consummate procrastinator in my younger days, I fully understand this form of human weakness.
We start with a task we must perform or a problem which we know we must solve – but which we would rather avoid, due to some level of unpleasantness which we associate with the matter in question. In a moment of weakness, we make the mistake of asking ourselves a question: if I wait to deal with the matter until 'tomorrow', will it make much of a difference?
This creates a dynamic which quickly turns into a vicious circle. The reason why procrastination is such a debilitating flaw is that most problems are not so urgent that they absolutely must be attended to today. Thus, when we procrastinators ask ourselves that rhetorical question, we already know the answer: "no, waiting one more day will not make a difference."
The big problem with that process is that many situations deteriorate at a very gradual rate. This means that if each day we ask ourselves "can I wait one more day?", we will be able to answer that question affirmatively for a very long time. Meanwhile, the cumulative deterioration of our situation(s), caused by many days (or years) of delay can be much more serious. Few forms of cancer can make us noticeably more ill over the span of only a day, yet we are all well aware of the cumulative destructiveness of that disease.
Most economic problems evolve in a similar manner. If we deal with the problem promptly, we may escape any adverse impact at all, while if we wait too long, the problem can easily become 'fatal'. As individuals, the maturity gained by the passage of years (and often many years) eventually teaches us to avoid the vicious circle of procrastination. More articles from Bullion Bulls Canada….
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| Gold Prices Rise Slightly, Silver Falls Posted: 29 Jun 2010 03:49 PM PDT
Other commodities and stocks fell sharply. Crude oil plunged 3 percent — the most in more than three weeks, while major U.S. indexes plunged between 2.6 percent and 3.9 percent. (…) © CoinNews.net for Coin News, 2010. |
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| $18 Million Rare Double Eagles Exhibit at ANA World’s Fair of Money Posted: 29 Jun 2010 03:49 PM PDT 1861-P Paquet and 1921 Proof Double Eagles in Historic ANA Boston Exhibit (Boston, MA) — An $18 million display of two rare Double Eagles accompanied by Boston-related early Americana will be one of the exhibit highlights in the Museum Showcase area at the American Numismatic Association World's Fair of Money convention in Boston, August 10 – 14, 2010.
The coins in this first-ever display are the finer each of the two known 1861 Philadelphia Mint "Paquet Reverse" gold $20, graded NGC MS67, and 1921 Proof Roman Finish Saint-Gaudens Double Eagle, graded NGC SP64. Insured for $8 million each, they are being provided for the ANA exhibit by Brian Hendelson, President of Classic Coin Co. of Bridgewater, New Jersey. (…) © CoinNews.net for Coin News, 2010. |
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| The original dollar crisis, before central banks lost all interest in gold Posted: 29 Jun 2010 03:49 PM PDT 11p ET Tuesday, June 29, 2010 Dear Friend of GATA and Gold: Zero Hedge has posted the first part of a likely three-part essay on "the original dollar crisis" of the late 1960s and early '70s and the current dollar crisis, written by the pseudonymous John Law. Since gold figures heavily in it, the basics of the first dollar crisis may be well known in the gold community, but this account has a lot of interesting details. Just remember that this was all long ago — before, as Kitco's Jon Nadler might remind us, central banks lost any interest in manipulating the gold price, and before, as CPM Group's Jeffrey M. Christian might remind us, central banks lost interest in gold altogether. The essay is headlined "The Original Dollar Crisis and How It Led to Today's Crisis — Part 1″ and you can find it at Zero Hedge here: http://www.zerohedge.com/article/guest-post-original-dollar-crisis-and-h… CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/index.html * * * 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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| Imagine gold’s price if any of this cash had gone into actual metal Posted: 29 Jun 2010 03:49 PM PDT Gold ETF Swells To Pass $50 Billion Milestone By Carolyn Cui http://blogs.wsj.com/marketbeat/2010/06/29/gold-etf-swells-to-pass-50-bi… Amid all the market doom and gloom, the world's largest gold fund is quietly celebrating another major milestone: SPDR Gold Shares, an exchange-traded fund backed by physical bullion, has recently surpassed $50 billion in assets. Driven by concerns over the euro zone sovereign debt crisis and a double-dip recession, investors have plowed $5.4 billion of net cash into the fund during the first five months. At the same time, gold prices have continued to set records — gaining 13.4% so far this year — helping boost the fund's size. As of Monday's close, the fund boasts total assets under management of $53.3 billion. The fund — known as GLD because of its ticker symbol — now hoards a total of 1,316.18 metric tons of gold and rivals most of the world's central banks. If GLD were a central bank, it would rank fifth — just below France and above China. Gold's safe-haven trait was in evidence again on Tuesday, as stocks were hammered globally and commodity markets were mostly a sea of red. Gold futures for July delivery eked out a gain of $3.8, or 0.3%, to settle at $1,242 per troy ounce at the Comex division of the Nymex. Now investors are holding their breath to see whether the gold fund can pass out the $75.6 billion SPDR S&P 500 to become the world's largest ETF. The gap between the two ETFs — both run by State Street Corp. — has contracted sharply this year from $44.7 billion to $21.3 billion as gold prices have gained and stocks faltered. Join GATA here: New Orleans Investment Conference * * * 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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| Imagine gold's price if any of this cash had gone into actual metal Posted: 29 Jun 2010 03:49 PM PDT Gold ETF Swells To Pass $50 Billion Milestone By Carolyn Cui http://blogs.wsj.com/marketbeat/2010/06/29/gold-etf-swells-to-pass-50-bi… Amid all the market doom and gloom, the world's largest gold fund is quietly celebrating another major milestone: SPDR Gold Shares, an exchange-traded fund backed by physical bullion, has recently surpassed $50 billion in assets. Driven by concerns over the euro zone sovereign debt crisis and a double-dip recession, investors have plowed $5.4 billion of net cash into the fund during the first five months. At the same time, gold prices have continued to set records — gaining 13.4% so far this year — helping boost the fund's size. As of Monday's close, the fund boasts total assets under management of $53.3 billion. The fund — known as GLD because of its ticker symbol — now hoards a total of 1,316.18 metric tons of gold and rivals most of the world's central banks. If GLD were a central bank, it would rank fifth — just below France and above China. Gold's safe-haven trait was in evidence again on Tuesday, as stocks were hammered globally and commodity markets were mostly a sea of red. Gold futures for July delivery eked out a gain of $3.8, or 0.3%, to settle at $1,242 per troy ounce at the Comex division of the Nymex. Now investors are holding their breath to see whether the gold fund can pass out the $75.6 billion SPDR S&P 500 to become the world's largest ETF. The gap between the two ETFs — both run by State Street Corp. — has contracted sharply this year from $44.7 billion to $21.3 billion as gold prices have gained and stocks faltered. Join GATA here: New Orleans Investment Conference * * * 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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| Lawrence Williams: Central banks, investment houses probably rig gold Posted: 29 Jun 2010 03:47 PM PDT 9:40p ET Tuesday, June 29, 2010 Dear Friend of GATA and Gold: MineWeb's Lawrence Williams acknowledges at length tonight that the gold market is likely manipulated by a cabal of central banks and investment houses whose access to virtually money facilitates their fleecing ordinary investors over and over again as market regulators look the other way. Williams asks whether gold market manipulation is all that different from manipulation in other markets. Indeed it is, insofar as it is a matter of largely surreptitious government policy, suitable only for totalitarian and corrupt societies, not for democratic ones. Williams' commentary is headlined "Gold Price Manipulation — Probably. Conspiracy — A Matter of Semantics!" and you can find it at MineWeb here: http://www.mineweb.com/mineweb/view/mineweb/en/page31?oid=107062&sn=Deta… Send Williams a tinfoil hat. Cross his name off the Bank of England's Christmas party list but inscribe it in the Book of Gold. CHRIS POWELL, Secretary/Treasurer Join GATA here: New Orleans Investment Conference * * * 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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| Jim Rogers: Opportunities Are Now in Silver and Palladium Posted: 29 Jun 2010 03:47 PM PDT Market Folly submits: From time to time, we like to check in on investment guru Jim Rogers to catch up on his thoughts on the markets and global economy. We do so of course due to his past success with the Quantum Fund he previously ran with George Soros. Nowadays, Rogers invests his money under Rogers Holdings and he has some pretty staunch viewpoints. Rogers himself proclaims he is a poor market timer. So while he may be early on an investment theme, he often finds and rides macro trends. To some, his views seem repetitive. But you must keep in mind that he very frequently appears in the media and is seemingly asked the same questions over and over. The last time we checked in on Jim Rogers we saw that he was shorting market indices. From all of these interviews, one of his stances has become abundantly clear: he loves commodities and in particular, precious metals. In his recent slew of interviews, Rogers has proclaimed that he is fond of gold and still owns it. However, he is not buying more nor is he selling. In the end, he actually thinks gold will be a bubble in the distant future. For some reason he tosses out the year 2019 as his estimate, and it seems he thinks gold's reign will last a decade or so. He thinks this bubble top is a ways off because governments have been debasing their currencies at a rapid rate. Historically, he points out, this has always led to higher prices for real assets and he thinks this time will be no different.
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| The Long and Short of the Gold Market Posted: 29 Jun 2010 03:47 PM PDT Hard Assets Investor submits: You need buyers and sellers to make a market like the one in which gold is traded. There's no shortage of players in the gold market presently. There are, in fact, sellers aplenty now. Commercial traders have been building up a net short position that could soon outsize the one that set up gold's December sell-off.
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| U.S. Stocks Plunge; S&P 500 Tumbles to Eight-Month Low Posted: 29 Jun 2010 03:47 PM PDT By Kelly Bit –
U.S. stocks plummeted, sending the Boeing Co., Caterpillar Inc. and Alcoa Inc. fell more than The S&P 500 sank 3.1 percent to "China set the tone in the morning and then it accelerated, Among 24 industry groups in the S&P 500, none had a loss Global Growth Prospects The S&P 500 has tumbled 14 percent from this Benchmark indexes extended early losses after the Banks were the biggest drag on the Stoxx Europe 600 Index Boeing, Caterpillar Boeing led declines in the Dow Caterpillar declined 5.5 Alcoa slid 6.3 percent to China's exports face "strong headwinds" in the second half "China growth is ebbing," said Jack Ablin, chief investment Shanghai Composite The Shanghai Composite Index JPMorgan, the bank headed by Jamie Dimon, slid 3.8 percent Zimmer rose 0.1 percent to $54.60 for the only gain in the The benchmark index for U.S. stock options jumped the most Technical Levels The S&P 500 was testing levels watched by analysts who "The S&P can break below 1,040 and go on to test the 1,000 Technical analysts who use the Fibonacci ratios described Micron Declines Micron Technology Inc. sank 13 Chipmakers and semiconductor-related shares in the S&P 500 Casino companies slid after KeyBanc Capital Markets Inc. Wynn Resorts Ltd. dropped 7.7 Stocks retreated even after home prices in 20 U.S. cities
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| Posted: 29 Jun 2010 03:45 PM PDT
Before getting into my latest topic, a follow-up on my last comment. Mike Shedlock wasn't impressed, calling "another Keynesian clown":
Echoing Mish, an astute investor sent me this message:
I would like to respond to some of this criticism. First, it amazes me how ignorant people are on Keynes and Keynesian economics. Luckily, Lord Skidelsky, author of the most authoritative biography on Keynes, still writes his excellent columns with a genuine Keynesian twist.
And one doesn't need to look too far to see how fragile this recovery is. Stocks plunged on Tuesday following a weak consumer confidence report.
No legislation will ever stop another financial crisis. Moreover, the financial reforms were just fluff — cosmetic changes that did not address deep structural issues, especially in the OTC derivatives market which remains totally non-transparent. Finally, stocks moved down violently on Tuesday, but there is no fundamental reason for such a thrashing. Instead of preparing for the "Next Big One", market participants should prepare for a long period of wild market gyrations. What we've witnessed in the last few months may be a taste of things to come.
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| Fed Credit, Inflation and the Idiots in the Middle Posted: 29 Jun 2010 03:25 PM PDT A whole series of alarms occurred after I got the news, although I lost the source, that "food stamp usage just soared to a new record high" of 40.2 million persons. This number is alarming in itself because ...
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| Gold: Chart Updates - Gold is a Counter Trade to Currency Risk Posted: 29 Jun 2010 02:52 PM PDT |
| Deflationary Crisis Part 2, Will This Time Be Different For Gold and Silver? Posted: 29 Jun 2010 02:30 PM PDT
Stocks went down sharply today on concerns over consumer confidence and indications that show that the economy is stalling in China. China has been a leading market in this recovery and its bull market has helped the price of industrial metals and base metals. Over the past few weeks I have highlighted that the market has given signs of a major deflationary crisis and economic slowdown. Today these signs became apparent with a significant sell off on high volume and a break into new lows for the S&P 500 and Nasdaq. Today major institutions sold equities and sought shelter in treasuries and the dollar. Gold and silver both sold off early in the day but gold fought back and closed up and silver was able to recoup some of its losses. Gold and silver are still in a uptrend and above both the 50 day and 200 day moving average. Gold and silver miners also appear to be close to a major breakout. The S&P 500 and Nasdaq had a significant break of previous lows on high volume. I alerted readers several days ago to buy inverse etf's when the markets failed to regain the 50 day moving average for the second time. Many times after this second failure the market has a major breakdown. The time to short is when the averages fail at the 50 day, not when it makes new lows as many less experienced traders are doing now. Many traders fear that silver and gold may be a top here as they are comparing 2010 to 2008. I understand that fear and am monitoring that situation closely. I have received a lot of requests to comment on the situation. At the moment I believe that we will not see a correction in precious metals like we saw in 2008. There has been a global concerted effort for governments to devalue currency and assist the economy with unprecedented spending and cheap dollars. The Euro is on the verge of a collapse and there are major sovereign debt issues that are spreading to more countries. I do not believe the U.S. government will be immune from those debt issues. The United States has high unemployment, weak consumer confidence, a huge amount of debt and poor GDP growth. Gold miners appear to be on the verge of a major breakout into new pre credit crisis highs. Disclosure: Long Gold and Silver Mining Stocks The chart above shows the relative strength of the gold miner etf to the S&P 500. A break to 51 on that chart would show great relative strength to the market. During this market downturn since May 6th, miners and bullion have shown good relative strength which does not make me conclude that we are having a repeat of 2008.
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| Imagine gold's price if any of this cash had gone into actual metal Posted: 29 Jun 2010 01:59 PM PDT Gold ETF Swells To Pass $50 Billion Milestone By Carolyn Cui http://blogs.wsj.com/marketbeat/2010/06/29/gold-etf-swells-to-pass-50-bi... Amid all the market doom and gloom, the world's largest gold fund is quietly celebrating another major milestone: SPDR Gold Shares, an exchange-traded fund backed by physical bullion, has recently surpassed $50 billion in assets. Driven by concerns over the euro zone sovereign debt crisis and a double-dip recession, investors have plowed $5.4 billion of net cash into the fund during the first five months. At the same time, gold prices have continued to set records -- gaining 13.4% so far this year -- helping boost the fund's size. As of Monday's close, the fund boasts total assets under management of $53.3 billion. The fund -- known as GLD because of its ticker symbol -- now hoards a total of 1,316.18 metric tons of gold and rivals most of the world's central banks. If GLD were a central bank, it would rank fifth -- just below France and above China. Gold's safe-haven trait was in evidence again on Tuesday, as stocks were hammered globally and commodity markets were mostly a sea of red. Gold futures for July delivery eked out a gain of $3.8, or 0.3%, to settle at $1,242 per troy ounce at the Comex division of the Nymex. Now investors are holding their breath to see whether the gold fund can pass out the $75.6 billion SPDR S&P 500 to become the world's largest ETF. The gap between the two ETFs -- both run by State Street Corp. -- has contracted sharply this year from $44.7 billion to $21.3 billion as gold prices have gained and stocks faltered. 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: New Orleans 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:
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| Gold, Silver and Austerity versus Growth Posted: 29 Jun 2010 01:50 PM PDT We will kick off with a look at gold as she dances and teases her way around the previous record highs in a 'will she or will she not' frame of mind, as analysts wait patiently for a sign to hit the button. Is that a buy button or ...
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| And The Nominees For The "Best Dive" Category Are Lionel Messi... And Gold Posted: 29 Jun 2010 12:17 PM PDT
For all football fans out there, we have a suggestion: take a gold bar, put a number 10 jersey on it, and let it play on the Argentinian football team: the theatrics in the price of gold are only comparable to the ridiculous Latin American dives one observes on the pitch (for those unsure what we are talking about we have enclosed an informative video). Gold plunging from $1262 to $1240 in a few minutes compares only to a sweeper almost, but not quite, hitting Messi's leg. The rest is pure Oscar-worthy genius.
Yet for all the posturing, and all the theater, true class remains, and just as Messi is the best football player in the world, so gold's true worth will keep on being recognized by ever more people. Case in point - today, the GLD ETF, and the world's fifth largest (alleged) holder of gold, bought yet another 4.2 tonnes of the yellow metal. And here is something funny: on June 15, GLD closed at $121.02, the same as where it closed today. Yet in the meantime, GLD has bought 14 tonnes of gold (from 1,306.1 to 1,320.4 tonnes), or what some estimate is half the monthly output of all gold mines per month. Simply said, just this simple ETF continues to consume all the free supply there is in the market. And since the price of gold is unchanged in the interim, it obviously means there is absolutely nobody else buying gold anywhere, as S and D are in perfect equilibrium. Riiiiight. Our advice: just like on the football field, enjoy the theatrics in the gold price, but don't take your eye off the big picture - in the end, no matter how many yellow cards Messi gets for fake diving, Argentina will win the World Cup. As will gold (which incidentally is what the Cup trophy is made of).
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| As Long as Silver Doesn't Crash Through 18.00 nor Gold Through $1,218 They Will Keep Climbing Posted: 29 Jun 2010 12:13 PM PDT Gold Price Close Today : 1242.00Change: 3.80 or 0.3%Silver Price Close Today : 18.594Change -8.4 cents or -0.4%Platinum Price Close Today: 1541.50Change: -23.00 or -1.5%Palladium Price Close Today:... This is a summary only. Visit GOLDPRICE.ORG for the full article, gold price charts in ounces grams and kilos in 23 national currencies, and more!
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