Gold World News Flash |
- International Community Presses Juba, Khartoum On Sudan Referendum
- Platinum and Gold
- Ian Gordon: A Cyclical Case for Gold Stocks
- Nickel Production Pending For Mindoro In The Philippines
- US Economic Outlook: Indebted to Death
- Gold
- Crude Oil Rises on Bargain Buying, Gold’s Fate In the Hands of Investors
- Jim?s Mailbox
- Deciphering the BIS gold swap
- Gold's on the Cusp of a Parabolic Move Up: John Embry
- Good God: Revisions To Chart (Ponzi Ponzi Ponzi!)
- Simple Gold Strategy Says "Stand Aside" This August
- The Year of the Roth
- Grandich Client Update – Timmins Gold, Breakout Near?
- Grandich Client Silver Quest Resources Update
- Speaking at Sydney ANDA coin show
- Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% on the Day but Fall Almost 1% on the Week
- Why more Quantitative Easing can’t be avoided and will threaten the developed world and the U.S. Dollar
- Adrian Douglas: What's unravelling is gold price suppression
- Adrian Douglas: What's unravelling is gold price suppression
- Chimps, Champs, and Chumps
- Risk of Depression Low, Says Our Man in China
- The Housing Depression and Why It Suggests Improved Future Economic Growth
- In The News Today
- Jim's Mailbox
- More Rampant BIS Gold Swap Speculation
- Coin News Summary for July 25-31, 2010
- iShares Gold ETF Slashes Fees, Sees Results
- Capital Gold Group Report: Gold Rises as Biggest Monthly Drop This Year May Spur Buying
- Capital Gold Group Report: Chief Economist Rosenberg: Dow Could Fall to 5,000
- Capital Gold Group Report: GDP Slows in Second Quarter to 2.4% Rate – New Data Shows Deeper Recession
- COT Silver Report – July 30, 2010
- Gold in BIS swaps said to have come from looted bank customers' deposits
- Gold in BIS swaps said to have come from looted bank customers' deposits
- Nomura Sees Fed Issuing QE-Lite Statement On August 10
- Where Do You Stress?
- Bull/Bear Weekly Recap
- The China Property Bubble
- Are Treasuries The Last Diversifier Left?
- As Long as $1,180 Holds, the Gold Price Will Advance or Move Sideways Into August
| International Community Presses Juba, Khartoum On Sudan Referendum Posted: 30 Jul 2010 05:54 PM PDT The international community is pressuring the Juba and Khartoum governments to speed up preparation for a vote on South Sudan's future – a decision that will be dominated by the fate of coveted oil resources -- but an expert on the African country criticizes the lack of understanding about Sudan. The referendum, scheduled for January 2011, is widely expected to result in the south parting ways with the north after years of bitterness and war. Oil is located mainly in the south, but the north is also on the hunt for the precious commodity because a deal to divide the oil wealth will run out in six months. Many predict that arguing about the future of the resource will put the two sides on the brink of war once again. "Sudan is alarmingly unprepared for that referendum," said Rosie Sharpe, a campaigner for Global Witness, a London-based non-governmental organization focusing on conflict and resources. But Benaiah Yongo-Bure, an associate professor of social sc...
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| Posted: 30 Jul 2010 05:54 PM PDT Scott Wright July 30, 2010 2419 Words Platinum and gold, how much of a relationship do these metals really have? Gold has been the talk of the town lately, a growingly-popular safe haven in these wild economic times. But platinum, one hardly hears of this metal. Guys like me who have wives with high-end jewelry taste certainly know about platinum, and car buffs are familiar with its use in catalytic converters. But with the average investor knowing very little about this metal, is it even on the same playing field as gold? Platinum and gold are definitely on the same playing field in that they are both commodities in the midst of powerful secular bull markets undergirded by strong long-term fundamentals. Platinum’s bull ga...
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| Ian Gordon: A Cyclical Case for Gold Stocks Posted: 30 Jul 2010 05:54 PM PDT Source: Brian Sylvester of The Gold Report 07/30/2010 "We're not going into a double dip. We're going into a depression. I'm convinced of that," claims renowned Market Forecaster Ian Gordon. Using his sharpest tools, Gordon has determined that the biggest market crash in our lifetime is coming sooner than most expect. But he is using a three-pronged strategy to limit the damage and even make money in the dark times ahead. You will learn why Gordon believes gold, and gold equities in particular, will perform when nothing else does in this exclusive interview with The Gold Report. The Gold Report: Today we are talking with Ian Gordon, president of Longwave Analytics. Your market analysis model, known as the Longwave Principle, is a modified version of the Kondratieff cycle. Could you give us an overview of how it works? Ian Gordon: I think that I've actually embellished it quite a lot. I've done far more than I think Kondratieff ever envisioned. For instance, breakin...
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| Nickel Production Pending For Mindoro In The Philippines Posted: 30 Jul 2010 05:54 PM PDT By Claire O'Connor and James West MidasLetter.com Friday, July 30, 2010 It is rare, in the mining world, to secure quality along with quantity, but Mindoro Resources (TSX.V: MIO) believes it has done just that. With a well established license to operate in the Philippines, Mindoro has defined a large nickel-cobalt resource on its Surigao Project, has proven up gold resources on the Archangel Project and has major producer Gold Fields farming in on three copper-gold projects. Under the new leadership of CEO Jon Dugdale, appointed in February 2010, the company has been riding a tidal wave of new ambition and fresh enthusiasm, aiming to reach its main goal of developing the Agata direct shipping ore project and achieving nickel production by early to mid 2011. The History Of Mindoro Mindoro was formed in 1996, co-founded by Tony Climie B.Sc., ...
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| US Economic Outlook: Indebted to Death Posted: 30 Jul 2010 05:53 PM PDT John Stepek at MoneyWeek.com, talking about the "European bank stress tests" that were "a whitewash, of course" said that it kind of reminded him of "one of Gordon Brown's budgets." My immediate reaction, of course, and speaking as a true American, is to ask, "Huh? Gordon who?" as a clever way of reminding these British guys that real Americans, like me, don't know about anything, or care about anything, that is not about America and/or Americans and how it affects us, as Americans, but mostly me, personally, as an American. And this goes Freaking Mogambo Double (FMD) for some dirtbag, lying piece of worthless has-been British ex-prime minister named Gordon Brown, which rhymes with "clown," which could explain how he is infamous for having sold all of Britain's sovereign gold at the exact low price for gold, which makes you laugh at him – hahahaha! – even though the record-low price is more probably explained by the fact that he sold all of the gold, glutting the market and driving t...
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| Posted: 30 Jul 2010 05:53 PM PDT courtesy of DailyFX.com July 29, 2010 07:16 AM 240 Minute Bars Prepared by Jamie Saettele Gold has topped. Please see the latest special report for details. Gold is making its way lower and in an impulsive fashion. I wrote yesterday that “after bouncing to 1204, gold is testing its low so a secondary top may be in place at 1204.” Gold has plunged and the metal is probably headed much lower in a 3rd wave. The next important support area is 1045/67 (former 4th wave extreme and 161.8% extension). Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday evenings), technical analysis of currency crosseson Wednesday and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to [EMAIL="jsaettele@daily...
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| Crude Oil Rises on Bargain Buying, Gold’s Fate In the Hands of Investors Posted: 30 Jul 2010 05:53 PM PDT courtesy of DailyFX.com July 30, 2010 12:41 AM A very interesting week with regard to commodities saw crude oil inventories surge to levels just shy of 10-year highs and gold ETF holdings plummet 500,000 troy ounces. Nevertheless, the near-term outlook for both commodities is highly uncertain. Commodities - Energy Crude Oil Rises on Bargain Buying Crude Oil (WTI) $78.12 -$0.24 -0.28% Commentary: Oil rose $1.37, or 1.78% on Thursday, as traders used the recent sell-off as an opportunity to buy. After the bearish inventory report on Wednesday, prices may find it hard to advance further. A bit of consolidation is possible under the recent double top resistance area. In the event next week’s report is bullish or at the very least neutral, prices should approach $80; but that remains to be seen. Technical Outlook: Prices found support at $75.81, the 23.6% Fibonacci retracement of the 5/20-6/28 upswing. Near-term resistance lines up in the $79.38-80....
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| Posted: 30 Jul 2010 05:53 PM PDT View the original post at jsmineset.com... July 30, 2010 11:29 AM Time to Accumulate metals and mining stocks-UBS CIGA Eric Word continues to leak out, buried within the deep recesses of the Internet, despite the selling-induced fear created by the paper operation. As we have been saying for awhile, it will be today’s enemy of gold – bullion banks and agents rather than the gold community that will profit most from gold’s secular rise. Positive View on Gold "We believe that ongoing pressure on sovereign debt markets, combined with persistent concerns over private sector credit contraction will raise the spectre of debt monetization repeatedly over the next few years," the analysts advised. "We expect that this background will remain very supportive for gold prices over the period, and that informs our above consensus gold price outlook and our inclusion of two gold stocks in our top ten picks…" Source: mineweb.co.za More…...
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| Posted: 30 Jul 2010 05:53 PM PDT FGMR - Free Gold Money Report July 29, 2010 – Much has been made recently of the news that the BIS last year completed a 380-tonne gold swap with an unnamed commercial bank. This BIS transaction intuitively strikes me as being hugely important. Unfortunately, the BIS and the bank involved have disclosed too little information for any of us outside the inner circle of central bankers to truly understand what is happening behind the scenes. Consequently, there have been various interpretations by market participants of what the swap means, but the fingers kept pointing at Portugal. First, Portugal reports owning 382 tonnes of gold, which is very close to the weight of metal swapped with the BIS. Second, as one of the notorious over-indebted and spendthrift PIGS (Portugal, Italy, Greece and Spain), it is likely that Portugal might be willing to complete unusual and even extraordinary transactions in order to try improving its financial position. I did not agree...
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| Gold's on the Cusp of a Parabolic Move Up: John Embry Posted: 30 Jul 2010 05:53 PM PDT The gold price had another relatively quiet trading day on Thursday. The price didn't do much until shortly after the lunch hour had begun in London... and from there it got sold off to its low of the day [$1,159.10 spot] in New York... which occurred [according to the NY Spot Gold [Bid] chart] at the London p.m. gold fix at 10:00 a.m. Eastern time. From that low, gold rose in fits and starts until it reached its high of the day [$1,170.00 spot] at precisely 1:30 p.m... which was the close of Comex trading. From there it traded sideways for the rest of electronic trading in New York. Silver's price path was the same as gold's for most of the day... with the low [$17.46 spot] coming at 8:30 a.m... shortly after Comex trading began. Silver's high [$17.78 spot] came in a small price spike right at the close of electronic trading at 5:15 p.m in New York on Thursday afternoon... only to be reversed [with interest] fourty-five minutes later when Far East ...
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| Good God: Revisions To Chart (Ponzi Ponzi Ponzi!) Posted: 30 Jul 2010 05:53 PM PDT Market Ticker - Karl Denninger View original article July 30, 2010 10:23 AM The revisions to GDP published this morning have turned to disgustingly nasty one of my favorite charts. Specifically, this one: You've all seen this a dozen times. Well, here's what it looks like with the revised GDP numbers "corrected" in the Excel file: "Holy Sheeit" doesn't even begin to describe this. These are not small changes, but they also mark the desperation of our government to avoid recognition of even a tiny, 2% annualized decrease in GDP! That's right folks - "as-reported", the maximum y/o/y "depression" that garnered the title "Great Recession" was a minuscule 2% decrease in REPORTED nominal GDP. But look at the policy response. Oh, and that last dot - it's estimated, based on the 2Q preliminary GDP numbers (which are almost-certainly too "hot" and the debt numbers (almost-certainly too "cold".) In addition the revisions make clear that there was in fact...
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| Simple Gold Strategy Says "Stand Aside" This August Posted: 30 Jul 2010 05:53 PM PDT By Dr. Steve Sjuggerud Friday, July 30, 2010 Earlier this month in DailyWealth, I introduced you to my Simple Gold Strategy that turned $10,000 into $2 million. When this indicator says, "Buy," gold compounds at 35% per year. When it says, "Stand aside," gold decreases in value. For most of the last 12 months, this indicator has said, "Buy." It's been the right advice. It caught the huge gains of late last year (up three straight months by 4.9%, 4.7%, and 8.0%). And it caught this year's best months. Take a look: [FONT=verdana][SIZE=2]Month Signal Return next month Jul 1, 2009 Stand Aside -1.2% Aug 1, 2009 Stand Aside +1.7% Sep 1, 2009 Buy +4.9% Oct 1, 2009 Buy +4.7% Nov 1, 2009 Buy +8.0% Dec 1, 2009 Buy -0.1% Jan 1, 2010 Stand Aside -0.9% Feb 1, 2010 Stand Aside -1.9% Mar 1, 2010 Stand Aside +1.6% Apr 1, 2010 Buy +3.2% May 1, 2010 Buy +4.9% Jun 1, 2010 Buy +2.3% Jul 1, 2010 Buy negative so far ...
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| Posted: 30 Jul 2010 05:53 PM PDT By Terry Coxon, Casey Research Until 2010 arrived, you couldn't have a Roth IRA if your income exceeded certain limits. That restriction is gone. Now anyone with a traditional IRA can convert it to a Roth. But should you? Background Roth or traditional, the central advantage of an IRA is tax deferral. Earnings accumulate and compound free of current tax, so the total value grows faster. An IRA is fed by annual contributions made out of employment income (salary, wages, and fees). With a traditional IRA, the employment income you contribute escapes current tax. Tax time for the contributions and their earnings comes when you withdraw the money. With a Roth IRA, you pay tax on the income you contribute, but the contributions and earnings eventually can be withdrawn tax-free (provided the Roth is at least five years old when you take the money out). The ceiling on contributions to either type of IRA is $5,000 per year ($6,000 if you've had a 50th birthday p...
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| Grandich Client Update – Timmins Gold, Breakout Near? Posted: 30 Jul 2010 05:53 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! July 30, 2010 06:59 AM In a business where failure is the norm (I’ve had numerous clients fail despite their best intentions), Timmins Gold (TMM-TSX-V) is proving to be the exception to the rule. Yesterday they announced good production numbers and all evidence continues to suggest them reaching their production goals. The share price has been locked in a trading range of about $1.20 to $1.50. This tremendous base has been built IMHO in part from a different type of shareholder becoming significant holders. I think much of this accumulation is done and barring no hiccup on the gold price side of things and some unforeseen corporate development, the share price appears to be set to break out to a higher valuation. My biggest fear remains TMM becomes a takeover target before it can reach it’s fullest valuation. [url]http:...
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| Grandich Client Silver Quest Resources Update Posted: 30 Jul 2010 05:53 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! July 30, 2010 07:34 AM I’m going to answer all the emails and calls about SQI-TSX-V -in one post. First and foremost, I remind you of what I’ve said for years about junior resource stocks – you must be mentally and financially prepared to lose part or all of your capital. Failure is the norm in this business. Don’t try and kid yourself that these two statements are anything but the true reality. Having said that, let me also remind you of two other important factors before I comment further on SQI: 1 – SQI is a client of Grandich Publications and my comments are highly biased 2- The bias is compounded by the fact as of this writing, I own 2.6 million shares of SQI. The fact that that can influence my comments and could change overnight must be taken into consideration. Okay, with that, here’s my comm...
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| Speaking at Sydney ANDA coin show Posted: 30 Jul 2010 05:43 PM PDT I will be doing a how to invest in gold presentation at the Sydney ANDA coin show on 14 & 15 August, details can be found here. I would recommend Mark van der Sluys' 'Gold as Money' and 'The role of Gold in an Investment Portfolio' presentation at 2pm and then I follow at 3:30pm. We will speaking on both Saturday and Sunday. Both our presentations will be filmed and put up on Perth Mint's YouTube channel if you can't make it. 
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| Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% on the Day but Fall Almost 1% on the Week Posted: 30 Jul 2010 04:30 PM PDT Gold rose as much as $7.10 to $1176.05 immediately following this morning's GDP report before it fell to see a $1.80 loss at $1167.15 in the next hour of trade, but it then stormed back higher for most of the rest of the day and ended near its late session high of $1183.22 with a gain of 1.07%.
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| Posted: 30 Jul 2010 04:00 PM PDT The U.S. economy can, at best, be described as in an "L"-shaped recovery. It is anemic, faced with unyieldingly high unemployment and overburdened with debt, but worst of all, the average consumer that has little to no confidence in the economy or housing for the next couple of years.
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| Adrian Douglas: What's unravelling is gold price suppression Posted: 30 Jul 2010 02:41 PM PDT By Adrian Douglas Yesterday the Financial Times published an article headlined "BIS Gold Swaps Mystery Is Unravelled" in an attempt to clarify the recently discovered gold swaps undertaken by the Bank for International Settlements with European commercial banks: http://www.ft.com/cms/s/0/3e659ed0-9b39-11df-baaf-00144feab49a.html I recently published my interpretation of these gold swaps and concluded that they were most likely a secret bailout of one or more bullion banks that do not have enough physical gold to meet burgeoning demand: Lawyers always tell their clients to shut up and not speak to the press because the more they say without proper legal consultation, the more likely they are to incriminate themselves. One has to wonder why lawyers at the BIS didn't offer similar advice to the spokespeople at the BIS, because they have opened their mouths and inserted both feet. The FT reports that "Jaime Caruana, head of the BIS, told the FT the swaps were 'regular commercial activities' for the bank." ... Dispatch continues below ... 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 FT also reports that "'the client approached us with the idea of buying some gold with the option to sell it back,' said one European banker, referring to the BIS." So we are led to believe that the BIS just casually called up some commercial banks and proposed a "regular commercial" activity of a 346-tonne gold swap. The only problem with this story is that this is the biggest gold swap in history. It was anything but a "regular commercial activity." The FT tries to palm off the biggest gold swap in history as just a matter of the BIS earning a little return on $14 billion. The FT says it has learned that the swaps, which were initiated by the BIS, came as the so-called "central banks' bank" sought to obtain a return on its huge U.S. dollar-denominated holdings. The BIS asked the commercial banks to pledge a gold swap as guarantee for the dollar deposits the banks were taking from the Basel-based institution. And GATA has learned that the moon is made of Swiss cheese. In central banking $14 billion is chump change. The U.S. Treasury auctions between $70 billion and $130 billion of Treasury debt very other week. Only a few weeks ago the European Central Bank created a trillion dollars out of thin air to defend the euro amid the Greek debt crisis. There are two sides to a swap transaction, but one would have to have the IQ of a grapefruit to believe that the important part of this transaction is a piffling $14 billion and not the 346 tonnes of gold that make it the biggest gold swap in history. But the BIS has given us another piece of information. The FT says: "Three big banks -- HSBC, Societe Generale, and BNP Paribas -- were among more than 10 based in Europe that swapped gold with the Bank for International Settlements in a series of unusual deals that caused confusion in the gold market and left traders scratching their heads." I had assumed in my last article that only one bullion bank was involved, but we now find that more than 10 banks were involved. The first on the list is none other than HSBC, which along with JPMorganChase holds 95 percent of all gold and precious metals derivative positions among U.S. commercial banks as reported to the U.S. Treasury Department. HSBC and JPMorganChase are also holding a massive short position in gold and silver on the New York Commodity Exchange. Further, HSBC is the custodian of the gold that is supposedly backing the exchange-traded fund GLD. In my analysis of the BIS swaps I postulated that a bullion bank had made a swap with one or more central banks and had obtained bullion in exchange for $14 billion. I further postulated that the bullion bank made another swap with the BIS whereupon the BIS gave the bank $14 billion but the bullion bank did not hand over the gold to the BIS but instead credited the BIS with a ledger entry of gold in the BIS unallocated gold account. This would allow the bullion bank to have real gold to meet burgeoning demand while the accounts would show that the same gold had been credited to the BIS. The FT says: "Officials said other commercial banks obtained the gold from the lending market, borrowing bullion from emerging countries' central banks." So the tripartite nature of this shady transaction is confirmed -- central banks were a source for the real gold. But the real gold wasn't the "gold" that the BIS received as a swap for $14 billion. The FT explains: "The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called 'allocated accounts,' which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper 'unallocated accounts,' which give banks access to their bullion for their day-to-day operations." But unallocated gold is not gold at all. It is not gold that has been deposited that is loaned to someone else. It is gold that has been deposited that is loaned simultaneously to many other people. I have estimated that for each ounce in their vaults the bullion banks have loaned or sold 45 ounces. So the FT's story appears to confirm my thesis that the BIS has been credited with 346 tonnes of ledger-entry gold in the BIS unallocated gold accounts held with the bullion banks. This makes the BIS an "unsecured creditor" of the bullion banks as defined by the London Bullion Market Association's description of "unallocated account" holders. The FT story suggests that at least 10 bullion banks needed physical gold bullion desperately. This looks like a rerun of the 1960s London Gold Pool fiasco where central banks dishoarded gold to meet massive investor demand in a futile attempt to maintain a gold price of $35 per ounce. I have spelled out in recent articles that there is a run on the bullion banks has begun and is gaining momentum. Investors and institutions are realizing that "unallocated gold" is not gold at all but just an unsecured promise for gold. So investors and institutions are starting to demand delivery of their metal, and as there is only 1 ounce backing each 45 ounces that are claimed, the situation is turning into what will be a short squeeze of epic proportions. The FT says: "Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee." As Jeffrey Christian of CPM Group has explained, the "physical" gold market is in fact a misnomer as that market is actually a paper market backed by only a small amount of physical gold: http://www.cpmgroup.com/free_library1/HEDGING_AND_DERIVATIVES/Bullion_Ba... So investors have bought a record amount of "physical gold," which is actually paper gold that they have never seen, and only about 2.3 percent of what has been sold actually exists. The bullion banks are "awash" with liabilities for the record amount of gold they are supposed to be holding. Investors are now distrusting the bullion banks and are asking for delivery, so is it surprising that the record amount of "physical gold" sales has led to a record gold swap being transacted to give the bullion banks liquidity? The International Monetary Fund has been surreptitiously selling gold at a clip of around 15 tonnes per month since February without any official announcements and without disclosing the recipients. This is another sign that the bullion banks are in serious trouble. When 45 ounces of gold are sold but only 1 ounce is sourced, the result is a massive suppression of the gold price. But the converse is also true: When 45 ounces of gold are demanded for every 1 ounce that is in the vault, the price explosion is beyond imagination. What is unravelling is not the mystery of the BIS gold swaps, as claimed by the Financial Times, but the unravelling of the gold price suppression scheme itself. ----- Adrian Douglas is a member of GATA's Board of Directors and editor of the Market Force Analysis letter (www.MarketForceAnalysis.com), which provides indications of market turning points and good times to enter, take profits, or exit a market. Subscribers receive bi-weekly bulletins on the markets of their choice. 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: ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth
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| Adrian Douglas: What's unravelling is gold price suppression Posted: 30 Jul 2010 02:41 PM PDT By Adrian Douglas Yesterday the Financial Times published an article headlined "BIS Gold Swaps Mystery Is Unravelled" in an attempt to clarify the recently discovered gold swaps undertaken by the Bank for International Settlements with European commercial banks: http://www.ft.com/cms/s/0/3e659ed0-9b39-11df-baaf-00144feab49a.html I recently published my interpretation of these gold swaps and concluded that they were most likely a secret bailout of one or more bullion banks that do not have enough physical gold to meet burgeoning demand: Lawyers always tell their clients to shut up and not speak to the press because the more they say without proper legal consultation, the more likely they are to incriminate themselves. One has to wonder why lawyers at the BIS didn't offer similar advice to the spokespeople at the BIS, because they have opened their mouths and inserted both feet. The FT reports that "Jaime Caruana, head of the BIS, told the FT the swaps were 'regular commercial activities' for the bank." ... Dispatch continues below ... 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 FT also reports that "'the client approached us with the idea of buying some gold with the option to sell it back,' said one European banker, referring to the BIS." So we are led to believe that the BIS just casually called up some commercial banks and proposed a "regular commercial" activity of a 346-tonne gold swap. The only problem with this story is that this is the biggest gold swap in history. It was anything but a "regular commercial activity." The FT tries to palm off the biggest gold swap in history as just a matter of the BIS earning a little return on $14 billion. The FT says it has learned that the swaps, which were initiated by the BIS, came as the so-called "central banks' bank" sought to obtain a return on its huge U.S. dollar-denominated holdings. The BIS asked the commercial banks to pledge a gold swap as guarantee for the dollar deposits the banks were taking from the Basel-based institution. And GATA has learned that the moon is made of Swiss cheese. In central banking $14 billion is chump change. The U.S. Treasury auctions between $70 billion and $130 billion of Treasury debt very other week. Only a few weeks ago the European Central Bank created a trillion dollars out of thin air to defend the euro amid the Greek debt crisis. There are two sides to a swap transaction, but one would have to have the IQ of a grapefruit to believe that the important part of this transaction is a piffling $14 billion and not the 346 tonnes of gold that make it the biggest gold swap in history. But the BIS has given us another piece of information. The FT says: "Three big banks -- HSBC, Societe Generale, and BNP Paribas -- were among more than 10 based in Europe that swapped gold with the Bank for International Settlements in a series of unusual deals that caused confusion in the gold market and left traders scratching their heads." I had assumed in my last article that only one bullion bank was involved, but we now find that more than 10 banks were involved. The first on the list is none other than HSBC, which along with JPMorganChase holds 95 percent of all gold and precious metals derivative positions among U.S. commercial banks as reported to the U.S. Treasury Department. HSBC and JPMorganChase are also holding a massive short position in gold and silver on the New York Commodity Exchange. Further, HSBC is the custodian of the gold that is supposedly backing the exchange-traded fund GLD. In my analysis of the BIS swaps I postulated that a bullion bank had made a swap with one or more central banks and had obtained bullion in exchange for $14 billion. I further postulated that the bullion bank made another swap with the BIS whereupon the BIS gave the bank $14 billion but the bullion bank did not hand over the gold to the BIS but instead credited the BIS with a ledger entry of gold in the BIS unallocated gold account. This would allow the bullion bank to have real gold to meet burgeoning demand while the accounts would show that the same gold had been credited to the BIS. The FT says: "Officials said other commercial banks obtained the gold from the lending market, borrowing bullion from emerging countries' central banks." So the tripartite nature of this shady transaction is confirmed -- central banks were a source for the real gold. But the real gold wasn't the "gold" that the BIS received as a swap for $14 billion. The FT explains: "The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called 'allocated accounts,' which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper 'unallocated accounts,' which give banks access to their bullion for their day-to-day operations." But unallocated gold is not gold at all. It is not gold that has been deposited that is loaned to someone else. It is gold that has been deposited that is loaned simultaneously to many other people. I have estimated that for each ounce in their vaults the bullion banks have loaned or sold 45 ounces. So the FT's story appears to confirm my thesis that the BIS has been credited with 346 tonnes of ledger-entry gold in the BIS unallocated gold accounts held with the bullion banks. This makes the BIS an "unsecured creditor" of the bullion banks as defined by the London Bullion Market Association's description of "unallocated account" holders. The FT story suggests that at least 10 bullion banks needed physical gold bullion desperately. This looks like a rerun of the 1960s London Gold Pool fiasco where central banks dishoarded gold to meet massive investor demand in a futile attempt to maintain a gold price of $35 per ounce. I have spelled out in recent articles that there is a run on the bullion banks has begun and is gaining momentum. Investors and institutions are realizing that "unallocated gold" is not gold at all but just an unsecured promise for gold. So investors and institutions are starting to demand delivery of their metal, and as there is only 1 ounce backing each 45 ounces that are claimed, the situation is turning into what will be a short squeeze of epic proportions. The FT says: "Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee." As Jeffrey Christian of CPM Group has explained, the "physical" gold market is in fact a misnomer as that market is actually a paper market backed by only a small amount of physical gold: http://www.cpmgroup.com/free_library1/HEDGING_AND_DERIVATIVES/Bullion_Ba... So investors have bought a record amount of "physical gold," which is actually paper gold that they have never seen, and only about 2.3 percent of what has been sold actually exists. The bullion banks are "awash" with liabilities for the record amount of gold they are supposed to be holding. Investors are now distrusting the bullion banks and are asking for delivery, so is it surprising that the record amount of "physical gold" sales has led to a record gold swap being transacted to give the bullion banks liquidity? The International Monetary Fund has been surreptitiously selling gold at a clip of around 15 tonnes per month since February without any official announcements and without disclosing the recipients. This is another sign that the bullion banks are in serious trouble. When 45 ounces of gold are sold but only 1 ounce is sourced, the result is a massive suppression of the gold price. But the converse is also true: When 45 ounces of gold are demanded for every 1 ounce that is in the vault, the price explosion is beyond imagination. What is unravelling is not the mystery of the BIS gold swaps, as claimed by the Financial Times, but the unravelling of the gold price suppression scheme itself. ----- Adrian Douglas is a member of GATA's Board of Directors and editor of the Market Force Analysis letter (www.MarketForceAnalysis.com), which provides indications of market turning points and good times to enter, take profits, or exit a market. Subscribers receive bi-weekly bulletins on the markets of their choice. 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: ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth
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| Posted: 30 Jul 2010 12:52 PM PDT By Aristotle (10/18/2000; 7:24:11MT - usagold.com msg#: 39302) I enjoyed the brief detour of the forum on Monday (and some previous days) into the realm of personality types -- with the Gold-related hypothesis that Gold advocates are most likely of the *NT* type. Dabbling with a linked on-line testing page revealed me to be distinctly a type INTP --for whatever that's worth to anyone keeping
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| Risk of Depression Low, Says Our Man in China Posted: 30 Jul 2010 12:44 PM PDT By Rick Ackerman, Rick's Picks ( Rick's Picks frequently runs guest commentaries expressing opinions that differ markedly from our own. Below, Mario Cavolo, an expatriate who lives in China, argues that there is no global, deflationary depression bearing down on us, but rather a muddle-along economy with strong spots as well as weak ones. We disagree and see a period of economic darkness more severe and widespread than any ever recorded. That's because the world is unwinding a financial asset bubble with a notional value of nearly a quadrillion (i.e., $1,000,000,000,000,000) dollars. Considering the sum involved, there can be no easy or quick return to economic health. More logical is that a totally corrupt global financial system will have to be destroyed before we can rebuild the economy on honest trade. As things stand, the world's financial-products-and-services balance sheet is at least ten times as large as the ledger for trade in real goods and services. Mario notes optimistically that Japan has muddled through its decades-long deflationary recession without experiencing social disintegration. Although this is true, we would argue that it is so only because Japan had the rest of the world – including an insatiable U.S. consumer – to keep its powerful export machinery humming as it traversed deflation's valley of death. But who will bail out the U.S. and Europe as we continue to sink together? We could take on Mario's arguments point by point here, but we'lll let that happen in the Rick's Picks forum, which continues to attract an intelligent and articulate following. RA) It is easy to continue feeling humbled and confused by the sentimental and fundamental dance of the world's asset classes and regions, be they equities, currencies, commodities, or that shiny stuff; feel free to pick your basket of market sectors to analyze and track. DaBoyz is a moniker here at Rick's advisory website, typically referring to the big time market players, institutional investors, bank/investment house trading desks and other various neo-elitists who have literally taken over the world's free markets. Planet Hollywood was a great brand name idea. Today, so is Planet Las Vegas or Planet Macau. The singular "George Soros who made billions shorting the British pound" example has
become a cancerous plurality on the daily tape in a high stakes global trading playground. It is indeed real, a separate "sector" of reality, while the rest of reality — the real reality of the real world — goes on day by day, dealing with the damage trickling down. As might be suspected as the new reality unfolds, there is bad news for some and there is good news for others, and the point of this article is the worryingly good good news. Also, note that this article has a point of view with a high correlation to China and the U.S. The One Exception The rich are richer than ever the world over, with more than enough evidence available to confirm that this is the case. Furthermore, it is so on an unprecedented global scale now that China and her citizens have led the rise of the APAC region to prominence and power alongside the American and European economic blocs. As we shall see, America's decline is the decline of only one main sector of her economy, along with the rise of others. No, the baby is not going to be thrown out with the global bath water, and there will be no doomsday collapse with one exception: a 30% chunk of the middle class in America whose lives and careers and futures have been decimated. They may as well pack their bags and come to the APAC/China region to teach English at twenty bucks an hour, because that's loads better than anything they are going to find staying put. Those are the folks in the wrong place at the wrong time in the annals of history's economic and political cycles. We should genuinely feel for their plight, including many whom I know personally. Inflationary Vortex To Hell? What does it all mean? Let's make sure we understand where the balance points lie and have a clear understanding of what to expect in the coming years. Rick and a number of his loyal, fabulously intelligent and respecting followers make a well thought-out case for an impending, downward spiral into hell which, however, will simply never occur. Until you can wrap your mind around the idea of being sucked downward into a spiraling vortex yet that is being sucked upward into an inflationary vortex, you're missing today's and tomorrow's reality. We have quite the dichotomy to resolve, and it is not a question of inflation vs. deflation. It will not go "one way or the other." Different regions and sectors of the now intricately connected global economy will experience vastly different economic impacts. Oh joyful global happy days for so many than ever before! Do you know that? That's a fact to contend with not argue about, making it very hard to reconcile with predictions of a worldwide doomy, gloomy deflation scenario. We've talked about how the Japanese economy spent 15 years in deflationary hell, going nowhere. But if the majority of her citizens had a million in the bank and house worth that much, who really cared? In the end, if the trappings of daily life are comfortable, if you know your home is secure, you have enough money to make it to your death and beyond, so then what's the fuss if the economy sucks? This lack of economic stress is typical of the mindset of today's newly rich China citizen, both her poor citizens and her newly rich middle class citizens. While it may be frustrating and annoying, it is not a big problem to be unemployed if you have $200,000 in the bank and a home worth $300,000 with no mortgage, like most of your neighbors. Better to Be Poor or Rich in China Let's get the "poor in China" debate out of the way quickly. If you're poor in America, you're really screwed from several points of view. If you're poor in China, you're not destitute. Life can still be very safe and comfortable at only USD $200/month. Why? Because you don't need a car to get a low paying job, your expenses at the level of "local" life are 10 times lower than in America; you can rent a comfortable room for $75 (the room I rented in Huntington Beach back in the early 90's was $450/month) and there are no minority drug gangs with guns around destroying the neighborhood and threatening your safety; that's even today, even in magnificent Shanghai! You can eat three square freshly cooked meals of noodles or rice, with veggies and a protein for USD $5 total. You ride an old bicycle no one will steal and which can be replaced for USD $10 if it is stolen anyway. Your medical expenses are equally cheap starting with antibiotics for USD $3 (Cipro or Cefradine, for example) when you catch a winter cough and fever. You can even get a body massage with a haircut and a happy ending for less than USD $20, for those of you who understand what I just wrote. Hard to imagine such a daily lifestyle, eh? Yet it is accessible and normal to a person who is struggling to get on their feet here in China, making it a fabulous place to be "poor". And let's take a final moment for the supposedly miserable 800 million farmers; they have plenty of food, they live in brick dwellings with cheap coal brick oil barrels to stay warm in winter, they eat three square a day, freshly picked and cooked. I'm not saying its great. They toil the fields 12 hours a day but it's just basic countryside living and I wouldn't call that "poor" as a typical Westerner defines poor or poverty. America's Deep Wealth This lack of economic stress is also typical of the mindset of today's upper middle class and rich Americans. While it may also be frustrating and annoying for business to be bad or to have your career obliterated, it is not a big problem to be unemployed if you have a boatload of money in the bank and a nice home with plenty of equity like most of your rich and semi-rich neighbors. American citizens with plenty of money are all over the place. They are out spending it and there are enough of them in combination with all the other of the world's rich and semi-rich to sustain the global economy. Ah, but wait. You are screaming that can't be true. Then why is it true? In the U.S., the rich and semi-rich are richer than ever and out spending! We can say corporate earnings are questionable due to accounting questions and games, but are they a disaster indicative of impending doom? They are certainly not. American corporations have gotten lean in the past two years and that has hurt many in terms of employment. But that also means it is much easier to turn a profit and move forward in the global economy, which they are. And imagine what will happen when the U.S. banks do start lending again. Meanwhile, the middle class chunk of around 40 million citizens and their lifestyle has been decimated, transformed and sinking into that miserable abyss. It is their time of decline in the economic cycle of rises and declines. China's Huge Home Equity Back to China for a moment to do a big little calculation; I've said the rich are richer than ever here with the rising middle class of 300 million also richer than ever, rising proudly and happily. Let's look at just one key slice of the Chinese population with the following conservative calculation: an average 100,000,000 million homeowners with equity in their homes which has increased from $50,000 to $150,000 equaling a total of $15,000,000,000,000. May I ask is that 15 TRILLION in pure available home equity wealth with NO mortgages? Yes it is. And is that equity on top of the fabulously rising salaries? Yes it is. In addition to the elite rich sector, this is their time of rising in the economic cycle of rises and declines. Good for them, they are as entitled as any other nation state to prosper and grow as history reveals in the long term economic cycles of growth and decline. Keynesian Rape However, it is a setup for the continuation of the Keynesian social neo-elitist raping of the world which is also arranged by those same in power to simply absorb the entire mess via continued price inflation and decline of currency purchasing power; the only exception being American real estate and wages, more than offset by the polar opposite happening in China! What will happen, what is happening is this: One slice of the asset pie at a time, in some bizarrely rhythmic fashion will continue to inflate. For example, China wages and prices. Now they are inflating and will continue to do so for years to come. Real estate will flatten a bit but with little leverage, any sharp property value declines will be quickly absorbed and forgotten. Just think of the American expansion starting from the 60's and you can easily see the point. Then another couple of slices also inflating globally; crude oil and gold for example. Up, up, up they will go. The cost of energy and water supply: heading up. But not U.S. middle class wages and real estate. Those are two slices of the pie not likely to budge anytime soon. But that's only two slices of a very large and complex pie. Conclusions The final conclusion is twofold. First, that the richer and richer hundreds of millions in the global economy identified in this article will sustain the global economy and are easily able to absorb the continued worldwide inflation of prices and decline in currency purchasing power. They will still sleep soundly at night. Interest rates by the way, must remain low relative to risk or these folks will stop spending and investing in the asset classes. Bonds won't collapse because instead currencies will simply decline in purchasing power across the global board. The daily purchasing power of "the haves" will of course also deteriorate along with everyone else's, but so what? They will "cut back" but still buy extra virgin olive oil, brand name clothes, send their kiddies to a good college, and go to the IMAX if they feel like it because they can afford it. Their lives will remain relatively protected, nice and comfortable. Secondly, The rest of the world starting with the struggling middle class on down will feel poorer and poorer over the coming years, a daily reality much easier to deal with if you live in China/Asia than if you live in America or Europe. One might ask is there a historic migration from declining America somewhere in the cards? Maybe, but don't think for a moment that there's going to be a welcoming "Ellis Island" anywhere near Chinese shores. (If you'd like to have Rick's Picks commentary delivered free each day to your e-mail box, click here.) Rick's Picks is a trading newsletter for stock, gold, silver and mini-indexes. All trades are based on the proprietary Hidden Pivot technical analysis method. © Rick Ackerman and www.rickackerman.com, 2010.
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| The Housing Depression and Why It Suggests Improved Future Economic Growth Posted: 30 Jul 2010 12:40 PM PDT For the home construction industry, the recent recession has been a depression. The data tell a brutal tale. In 2005, construction started on 2,068,000 homes. In 2009, construction began on 544,000 homes - a drop of 73 percent. Read More...
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| Posted: 30 Jul 2010 12:35 PM PDT
U.S. Economy Grew 2.4% in Second Quarter, Below Forecast Growth in the U.S. slowed to a 2.4 percent annual rate in the second quarter, less than forecast, reflecting a larger trade deficit and an easing in consumer spending. The increase in gross domestic product compared with a median forecast of 2.6 percent of economists surveyed by Bloomberg News and follows an upwardly revised 3.7 percent pace in the first quarter that showed a jump in inventories, according to figures from the Commerce Department today in Washington. Business investment climbed at the fastest rate since 1997. "The economy is muddling through," Ethan Harris, head of North America economics at Bank of America-Merrill Lynch Global Research in New York, said in an interview after the report. "We're probably not going to see a really strong number for a while. We need to see some pickup in job growth." A slower pace of growth means employers may be reluctant to hire workers and more likely to keep a lid on prices in order to boost sales. Federal Reserve Chairman Ben S. Bernanke last week said the central bank is prepared to take further policy actions if the world's largest economy "doesn't continue to improve." The Standard & Poor's 500 Index dropped 1.1 percent to 1,089.97 at the 9:36 a.m. in New York. The yield on the 10-year Treasury note fell 6 basis points, or 0.06, to 2.92 percent. Median Forecast The projected gain in GDP was based on the median estimate of 81 economists surveyed. Forecasts ranged from gains of 1 percent to 4 percent. The worst U.S. recession since the 1930s was even deeper than previously estimated, reflecting bigger slumps in consumer spending and housing, according to the Commerce Department's annual revisions also issued today.
Jim Sinclair's Commentary 3 bank failures so far this weekend Bank Closing Information – July 30, 2010 Coastal Community Bank, Panama City, FL
Jim Sinclair's Commentary Both you and I need to follow the real stats. This for payment service is an absolute necessity to me. Harry Schultz, Shadow Stats and JSMineset should provide all you need for gold. - Worst Economic Downturn Since World War II Just Got Worst "No. 313: Second-Quarter GDP and Revisions "
Jim Sinclair's Commentary John Embry is spot on. The title tells you all. Gold's On The Cusp Of A Parabolic Move Up Gold moved to several new all time highs in the month of June despite the absence of any overt enthusiasm for the yellow metal amongst the general public. Sentiment is remarkably negative when one considers the fact that were it any other asset class making new highs in a powerful multi-year bull market, the mainstream press would be trumpeting the news and the public would be falling all over themselves to buy.
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| Posted: 30 Jul 2010 12:34 PM PDT Wall Street edges lower as investors mull slow recovery Stocks fell on Friday, rebounding for a second day in a row from more substantial losses, as concerns about slower economic growth held trading to a tight range. Do not associate a technical sell-off with any significant economic conclusions. The direction for stocks, sitting at or near support, will have little to do with lie and deny economic data series. Capital flows, seeking protection against further currency debasement, are driving this market. As for the slow recovery, my response to that is what did you expect? Consumption, the main driver of US national income, is beginning to fade as the size of the stimulus begins to fade and America begin to defy pop culture by saving. That's right saving a portion of their incomes. In addition, the engine of future growth, domestic private investment, remains flat at best, and the structural trade deficit is beginning to reassert itself. Government consumption and investment, based largely federal spending, continues to support a weakening private sector. In other words, the massive quantitative easing to date has done affect the economic trends that are just beginning to intensify. Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947: Gross Domestic Private Investment (GDPI) As A %GDP and Gross Domestic Private Investment (GDPI) As A %GDP Average from 1947: Net Exports (NETEX) As A %GDP and Net Exports (NETEX) As A %GDP Average from 1947: Government Consumption Expenditures and Gross Investment (GCEI) As A %GDP Average from 1947: Federal Consumption Expenditures and Gross Investment (FED) As A %GDP and Federal Consumption Expenditures and Gross Investment (FED) As A %GDP Average from 1947 Savings (SAV) As A %GDP and Savings (SAV) As A %GDP Average from 1947: Source: news.yahoo.com
Time to Accumulate metals and mining stocks-UBS Word continues to leak out, buried within the deep recesses of the Internet, despite the selling-induced fear created by the paper operation. As we have been saying for awhile, it will be today's enemy of gold – bullion banks and agents rather than the gold community that will profit most from gold's secular rise. Positive View on Gold "We believe that ongoing pressure on sovereign debt markets, combined with persistent concerns over private sector credit contraction will raise the spectre of debt monetization repeatedly over the next few years," the analysts advised. "We expect that this background will remain very supportive for gold prices over the period, and that informs our above consensus gold price outlook and our inclusion of two gold stocks in our top ten picks…" Source: mineweb.co.za
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| More Rampant BIS Gold Swap Speculation Posted: 30 Jul 2010 12:22 PM PDT Not one to let a sleeping dog lie, today we've encountered a new explanation for the mysterious Bank of International Settlements' 380 tonnes in gold swap operations. Before this week, James Turk, co-author of The Collapse of the Dollar, had yet to voice a theory on the swap. However, after learning Portugal is taking an unusual step (as a sovereign borrower) — of setting aside assets as collateral against derivative transactions in order to bring down its funding costs — Turk couldn't resist sharing his hunch. From the Kitco Commentator's Corner: "It has long been recognized that Portugal is active in the gold market. It had loaned gold to Drexel Burnham in the 1980s [...] So it is not farfetched to assume that Portugal had loaned its remaining gold to a commercial bank, which meant that Portugal was exposed to the credit risk of this bank. "Now consider for a moment, what if that gold loan had been made by Portugal to Citibank or some other zombie bank? It wouldn't look very good on Portugal's balance sheet to be owed 380 tonnes of gold by a near-bankrupt institution. Given that Portugal is taking steps to 'to reduce its funding costs' as the FT reports, it would be logical for it to get rid of that gold loan. "The best choice of course would be to demand repayment of the loan and put the 380 tonnes of gold back in its vault. That action though would drive the gold price sky-high, given the dearth of sellers of physical metal at current prices. Sky-high prices would blow-up the gold cartel and its efforts to continue capping the gold price as it operates its staged retreat, letting gold rise every year but not too much so as to not draw everyone's attention to it and the resulting consequences of ever-depreciating fiat currencies. So enter the BIS. "It swaps currency for the gold loan at the commercial bank. In other words, the 380 tonnes of gold is now owed to Portugal by the BIS, improving considerably the quality of Portugal's balance sheet. After all, who would you rather have owing gold to you? Some commercial bank like Citibank or central banks' own central bank, the BIS? Clearly, being owed gold by the BIS instead of a zombie bank would be one way for Portugal to 'reduce its funding costs' by improving the quality of its balance sheet." At this point, there are now more than a few BIS theories to go around. If you're interested in another, one from Gordon Long is available from Safehaven, here. It offers a longer and more detailed account of why the gold swap likely took place with Portugal, and ultimately the explanation includes a theory that gold market manipulation is making it more possible for SDRs to replace dollars as the world's reserve currency… if that sort of conjecture is your cup of tea. It's at least an interesting read. This latest theory came to our attention via a Kitco Commentator's Corner post on deciphering the BIS gold swap. Best, Rocky Vega, More Rampant BIS Gold Swap Speculation originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." More articles from The Daily Reckoning….
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| Coin News Summary for July 25-31, 2010 Posted: 30 Jul 2010 12:19 PM PDT What's New This Week……….
Japan's money economy began earlier than textbooks have described when archaeologists unveiled 33 bronze coins from the late seventh century unearthed in the village of Asuka, Nara Prefecture in 1998. Mark Borckardt gives some thoughts on The Most Important Coin I've Ever Handled : "During 30 years as a full time professional numismatist, I have had the opportunity to examine and handle many of the most important rarities in the American series….1907 Wire Rim Indian eagle with a plain edge" Previously Unknown Specimen of 1855 $50 Kellogg & Co. Fifty Dollar available at Heritage Boston ANA Coin Auction. "In the words of B. Max Mehl, the Kellogg & Co. fifty dollar gold pieces are "the most beautiful of all Pioneer gold coins and one of the rarest." On August 23 an extremely rare gold coin,Tibet's first gold coin, graded AU with an estimated price range US $30,000 – 60,000, will be one put on the block at Champion's Auction 11 at the Hyatt Regency Hotel , Hong Kong. The Professional Numismatists Guild (PNG) has created a definition of coin "doctoring" and now officially included it as one of the prohibitions in the organization's By-Laws.
Greg Reynolds Coin Rarities & Related Topics: This week includes Proof 1804 Eagle, Kellogg $50 gold coin, Half Unions, and an 1854-S Quarter Eagle. Mixed economic news around the world, concerns over a double dip recession and significant fiat currency weakness meant gold retained its lustre as a protector of wealth during the second quarter 2010, according to the World Gold Council's (WGC) latest Gold Investment Digest (GID). NGC Collectors Society has unveiled its newest website feature today – a comprehensive Collection Manager. This new tool allows collectors to organize and track their entire coin collections online in a secure password-protected environment. The Official Currency Auction of the 2010 ANA World's Fair of Money in Boston, MA will be conducted by Heritage Auctions Aug. 11-16. The auction includes 2800+ Lots from three floor sessions and one online session. The Story of the Two Greatest Gold Shipments In The History of the United States Mints By Dr. Thomas F. Fitzgerald. "Twice within a span of almost twenty-five years, all of the gold from the vaults of the 2nd San Francisco Mint, sometimes called the "Granite Lady," was sent to the United States Mint in Denver, Colorado. Yet the story of these two operations could not have been more different."
Two hundred limited-edition copies of Paper Money of the United States, 19th Edition, numbered and signed by co-authors Arthur L. Friedberg and Ira S. Friedberg, will be available for purchase at the American Numismatic Association's World's Fair of Money in Boston. Legend Market Report – The PCGS Invitational: This was by far the BEST one we have EVER attended since they began about 5 years ago. No, its not because our Jose sat down and in a few spins won a 4800 quarter jackpot, no activity on the bourse was strong. The only known Plain Edge 1907 ten dollar coin with Wire Rim, designed by Augustus Saint-Gaudens – and likely the only example of his coinage that he ever saw – is among the most historically important pieces in Heritage's upcoming U.S. Coin auction. It will be offered on Aug. 11 NEW & UPDATED – Our coverage of rare coin and currency news has expanded with Tim Shuck taking over as Editor of Coin News Daily. This is a special section of CoinLink where we scour the web for items of interest related to numismatics and post a short excerpt and link to these "off site" resources. We have also made changes to The Bullion Report with daily news and article updates, and a monthly analysis of the "Premiums Over Spot" for Gold and Silver Bullion products. View all the latest rare coin news here
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| iShares Gold ETF Slashes Fees, Sees Results Posted: 30 Jul 2010 12:18 PM PDT Tom Lydon submits: ETFs are cheap, but that doesn’t mean they’re not getting cheaper. One gold fund provider is engaging in a good old-fashioned price war to entice gold traders to its side of the camp, and it appears to be working. On July 1, BlackRock lowered the annual expenses on its gold ETF the iShares Comex Gold Trust ETF (IAU) to 0.25% from 0.40%, writes William Baldwin for Forbes. Market leader in gold ETFs, State Street-managed SPDR Gold Shares ETF (GLD) is maintaining its 0.40% expense ratio.
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| Capital Gold Group Report: Gold Rises as Biggest Monthly Drop This Year May Spur Buying Posted: 30 Jul 2010 12:18 PM PDT  By Pham-Duy Nguyen July 30 (Bloomberg) — Gold rose for a third day on The 5 percent price drop in July is the first monthly "Gold is beginning to catch some traction," said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Gold futures for December delivery rose $12.70, or 1.1 The euro headed for the first monthly gain against the "We view the latest decline in the gold price as Concern for Deflation Gold may be one of the best assets to own in a deflationary Federal Reserve Bank of St. Louis President James Bullard "It's looking like deflation is more of a risk now than The Fed has kept the benchmark interest rate between zero "Gold won't fall out of bed under any scenario in the
Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA
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| Capital Gold Group Report: Chief Economist Rosenberg: Dow Could Fall to 5,000 Posted: 30 Jul 2010 12:18 PM PDT By: Julie Crawshaw Friday, 09 Jul 2010 09:59 AM Gluskin Sheff Chief Economist and Strategist David Rosenberg says the Dow could go to 5,000. Rosenberg's reasons: Even if an economic double dip is avoided, the "Bob Farrell believes a test of the March 2009 lows is likely," Rosenberg points out. "I don't think anyone is in a position to debate five decades of "Notice how none of them work at a Wall Street bank." Assuming inflation averages 2 percent annually and that 2016 marks the "At that point, gold will likely be 5,000 too," Rosenberg says. Rosenberg says this forecast does not preclude cyclical rallies along "Investors should not be tempted into any other strategy than to rent these rallies and not own them," Rosenberg cautions. CPA Tim W. Wood maintains the upward market swing since is a bear market rally. "All the while, the politicians think that their printing spree, bailout "According to my analysis, we have entered a global debt crisis." © Moneynews. All rights reserved.
Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA
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| Posted: 30 Jul 2010 12:17 PM PDT
By Greg Robb July 30, 2010, 10:44 a.m. EDT WASHINGTON (MarketWatch) — The U.S. economy lost momentum in the second Real gross domestic product — the inflation-adjusted, seasonally The 2.4% increase in GDP was close to the 2.5% expansion expected by Economists believe that the growth was fairly strong in April and May "The post-recession rebound is history," said Bart van Ark, chief economist at the Conference Board. "We don't foresee a double dip," he continued, "but we do expect growth Investors initially reacted negatively to the report, with losses Bond investors, confident the coast remains clear as far as inflation Annual revisions released at the same time as the first estimate for During the recession, real GDP decreased at a 2.8% average rate, down from the prior estimate of a 2.5% rate. At the same time, the recovery, already one of the slowest, has been a Although the increase in GDP in the quarter was not as strong as the Now that the revisions have been released, the National Bureau of
Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA
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| COT Silver Report – July 30, 2010 Posted: 30 Jul 2010 12:17 PM PDT |
| Gold in BIS swaps said to have come from looted bank customers' deposits Posted: 30 Jul 2010 11:57 AM PDT 8:07p ET Friday, July 30, 2010 Dear Friend of GATA and Gold: If you want to believe the Financial Times, the 346 tonnes of gold swaps recently undertaken surreptitiously by the Bank for International Settlements were a matter of the BIS' requiring three of the world's biggest banks to pledge gold as collateral against U.S. dollar deposits placed with them by the BIS so the BIS could earn a little interest. According to the FT, the banks also needed to raise cash and so were glad to obtain it by collateralizing the BIS' deposits with gold. The FT's latest account of the transaction, published Thursday and appended here, is surely the account the BIS would like the world to settle for as curiosity about the swaps is increasing and raising concerns about the grotesque unaccountability of central banks. And as the mouthpiece of the financial establishment, the FT surely was only too happly to convey this unofficial official story. But it's a doubtful story and raises questions of its own. ... Dispatch continues below ... ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth For why would the BIS deposit money with banks considered so shaky that they would have to be required to pledge gold to secure the deposits? Wouldn't U.S., British, German, or French government bonds provide sufficient income and security for the BIS' funds? The BIS' annual report suggests that the bank already holds such bonds: http://www.bis.org/publ/arpdf/ar2010e8.pdf By depositing money at the three banks -- HSBC, Societe Generale, and BNP Paribas -- according to the FT -- was the BIS really hoping to earn get premium yields from the great business those banks have done lending on condominiums in Florida, Nice, and Madrid? And remarkably, according to the FT the gold obtained by the BIS as collateral from the three banks didn't really belong to the banks at all. Rather, as the GATA Dispatch suggested sarcastically three weeks ago (http://www.gata.org/node/8799), the gold was essentially looted from the three banks' own gold depositors. The FT reports: "The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called 'allocated accounts,' which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper 'unallocated accounts,' which give banks access to their bullion for their day-to-day operations." At least this part of the FT's story has the ring of truth and confirms what, among others, GATA board member Adrian Douglas and GATA consultant James Turk, founder of GoldMoney, have been warning for some time: that if you own "unallocated gold," you don't really own gold at all but have only a tenuous claim against a counterparty that likely is working against you from the start. In the case of the BIS gold swaps, the tenuous claim is against financial institutions the BIS considers so unreliable that it won't loan them money unless they turn over their customers' gold as security, thereby proving their unreliability. The FT story doesn't address what is to become of the collateralized gold just transferred to the BIS, but the section of the BIS' annual report cited at the link above shows that the BIS is constantly trading gold and gold futures and options, just as the journalist Edward Jay Epstein reported in his long profile of the BIS published in Harper's magazine in November 1983. (See http://www.gata.org/node/8773.) So odds are that the gold purchased from or supposedly kept at those commercial banks by gold investors is now being used by the international banking system to suppress gold's price against the interest of the investors who think they own it. The FT's story is headlined "BIS Gold Swaps Mystery Is Unravelled." The BIS can only hope that people will think so, and the FT can only hope that its story will get people to stop pestering it and other financial news organizations to do some serious, documented, on-the-record journalism instead of playing along with this manipulative, confidential source-based disinformation. CHRIS POWELL, Secretary/Treasurer * * * BIS Gold Swaps Mystery Is Unravelled By Jack Farchy and Javier Blas in London http://www.ft.com/cms/s/0/3e659ed0-9b39-11df-baaf-00144feab49a.html Three big banks -- HSBC, Societe Generale, and BNP Paribas -- were among more than 10 based in Europe that swapped gold with the Bank for International Settlements in a series of unusual deals that caused confusion in the gold market and left traders scratching their heads. The mystery of who was involved in deals with the BIS, the bank for central banks, and what they were doing, has become clearer. The Financial Times has learnt that the swaps, which were initiated by the BIS, came as the so-called "central banks' bank" sought to obtain a return on its huge US dollar-denominated holdings. The BIS asked the commercial banks to pledge a gold swap as guarantee for the dollar deposits they were taking from the Basel-based institution. When news of the swaps, which were disclosed in a note to the BIS's latest annual report, circulated among traders this month, it caused a sharp fall in the gold price, sending bullion to what was then six-week lows. Gold has since fallen further: It was trading at $1,164 an ounce on Thursday. Some analysts speculated that the swap deals were a surreptitious bailout of the European banking system ahead of last week's publication of stress tests. But bankers and officials have described the transactions as "mutually beneficial." "The client approached us with the idea of buying some gold with the option to sell it back," said one European banker, referring to the BIS. Another banker said: "From time to time, central banks or the BIS want to optimise the return on their currency holdings." Nonetheless, two central bank officials said some of the commercial banks also needed the US dollar funding and were keen to act as a counterparty with the BIS. The gold swaps began in December and surged in January, when the Greek debt crisis erupted and European commercial banks were facing funding problems. Jaime Caruana, head of the BIS, told the FT the swaps were "regular commercial activities" for the bank. In a short note in its annual report, published at the end of June, the BIS said it had taken 346 tonnes of gold in exchange for foreign currency in "swap operations" in the financial year to March 31. In the same fiscal year, the BIS took three times the amount of currency deposits it had taken the previous year as central banks around the world became concerned about using commercial banks for their deposits and turned to the Basel institution. In a gold swap, one counterparty, in this case a bank, sells its gold to the other, in this case the BIS, with an agreement to buy it back at a later date. The gold swaps were, in effect, a form of collateral against the US dollar deposits placed by the BIS with commercial banks. Gold is widely regarded as one of the safest assets, but has not been widely used as collateral in the past. Mr Caruana described the transactions as "loans with a guarantee." Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee. George Milling-Stanley, managing director for government affairs at the industry-backed World Gold Council, said: "The gold swaps commercial banks carried out with the BIS demonstrate the effectiveness of gold as an asset class, because even in the depths of the worst liquidity crisis in living memory, institutions with access to gold were able to make use of it to generate dollar liquidity. The issue also feeds right into the current debate among Asian central banks about the lack of assets suitable for use as cross-border collateral." Last year, CME Group, the world's largest derivatives exchange, allowed investors to use gold futures as collateral for some operations. Other institutions, such as central banks, had begun using and requesting gold as collateral in the past two years as perceptions of counterparty risk have risen, bankers and officials said. The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called "allocated accounts," which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper "unallocated accounts," which give banks access to their bullion for their day-to-day operations. Officials said other commercial banks obtained the gold from the lending market, borrowing bullion from emerging countries' central banks. 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: 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
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| Gold in BIS swaps said to have come from looted bank customers' deposits Posted: 30 Jul 2010 11:57 AM PDT 8:07p ET Friday, July 30, 2010 Dear Friend of GATA and Gold: If you want to believe the Financial Times, the 346 tonnes of gold swaps recently undertaken surreptitiously by the Bank for International Settlements were a matter of the BIS' requiring three of the world's biggest banks to pledge gold as collateral against U.S. dollar deposits placed with them by the BIS so the BIS could earn a little interest. According to the FT, the banks also needed to raise cash and so were glad to obtain it by collateralizing the BIS' deposits with gold. The FT's latest account of the transaction, published Thursday and appended here, is surely the account the BIS would like the world to settle for as curiosity about the swaps is increasing and raising concerns about the grotesque unaccountability of central banks. And as the mouthpiece of the financial establishment, the FT surely was only too happly to convey this unofficial official story. But it's a doubtful story and raises questions of its own. ... Dispatch continues below ... ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth For why would the BIS deposit money with banks considered so shaky that they would have to be required to pledge gold to secure the deposits? Wouldn't U.S., British, German, or French government bonds provide sufficient income and security for the BIS' funds? The BIS' annual report suggests that the bank already holds such bonds: http://www.bis.org/publ/arpdf/ar2010e8.pdf By depositing money at the three banks -- HSBC, Societe Generale, and BNP Paribas -- according to the FT -- was the BIS really hoping to earn get premium yields from the great business those banks have done lending on condominiums in Florida, Nice, and Madrid? And remarkably, according to the FT the gold obtained by the BIS as collateral from the three banks didn't really belong to the banks at all. Rather, as the GATA Dispatch suggested sarcastically three weeks ago (http://www.gata.org/node/8799), the gold was essentially looted from the three banks' own gold depositors. The FT reports: "The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called 'allocated accounts,' which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper 'unallocated accounts,' which give banks access to their bullion for their day-to-day operations." At least this part of the FT's story has the ring of truth and confirms what, among others, GATA board member Adrian Douglas and GATA consultant James Turk, founder of GoldMoney, have been warning for some time: that if you own "unallocated gold," you don't really own gold at all but have only a tenuous claim against a counterparty that likely is working against you from the start. In the case of the BIS gold swaps, the tenuous claim is against financial institutions the BIS considers so unreliable that it won't loan them money unless they turn over their customers' gold as security, thereby proving their unreliability. The FT story doesn't address what is to become of the collateralized gold just transferred to the BIS, but the section of the BIS' annual report cited at the link above shows that the BIS is constantly trading gold and gold futures and options, just as the journalist Edward Jay Epstein reported in his long profile of the BIS published in Harper's magazine in November 1983. (See http://www.gata.org/node/8773.) So odds are that the gold purchased from or supposedly kept at those commercial banks by gold investors is now being used by the international banking system to suppress gold's price against the interest of the investors who think they own it. The FT's story is headlined "BIS Gold Swaps Mystery Is Unravelled." The BIS can only hope that people will think so, and the FT can only hope that its story will get people to stop pestering it and other financial news organizations to do some serious, documented, on-the-record journalism instead of playing along with this manipulative, confidential source-based disinformation. CHRIS POWELL, Secretary/Treasurer * * * BIS Gold Swaps Mystery Is Unravelled By Jack Farchy and Javier Blas in London http://www.ft.com/cms/s/0/3e659ed0-9b39-11df-baaf-00144feab49a.html Three big banks -- HSBC, Societe Generale, and BNP Paribas -- were among more than 10 based in Europe that swapped gold with the Bank for International Settlements in a series of unusual deals that caused confusion in the gold market and left traders scratching their heads. The mystery of who was involved in deals with the BIS, the bank for central banks, and what they were doing, has become clearer. The Financial Times has learnt that the swaps, which were initiated by the BIS, came as the so-called "central banks' bank" sought to obtain a return on its huge US dollar-denominated holdings. The BIS asked the commercial banks to pledge a gold swap as guarantee for the dollar deposits they were taking from the Basel-based institution. When news of the swaps, which were disclosed in a note to the BIS's latest annual report, circulated among traders this month, it caused a sharp fall in the gold price, sending bullion to what was then six-week lows. Gold has since fallen further: It was trading at $1,164 an ounce on Thursday. Some analysts speculated that the swap deals were a surreptitious bailout of the European banking system ahead of last week's publication of stress tests. But bankers and officials have described the transactions as "mutually beneficial." "The client approached us with the idea of buying some gold with the option to sell it back," said one European banker, referring to the BIS. Another banker said: "From time to time, central banks or the BIS want to optimise the return on their currency holdings." Nonetheless, two central bank officials said some of the commercial banks also needed the US dollar funding and were keen to act as a counterparty with the BIS. The gold swaps began in December and surged in January, when the Greek debt crisis erupted and European commercial banks were facing funding problems. Jaime Caruana, head of the BIS, told the FT the swaps were "regular commercial activities" for the bank. In a short note in its annual report, published at the end of June, the BIS said it had taken 346 tonnes of gold in exchange for foreign currency in "swap operations" in the financial year to March 31. In the same fiscal year, the BIS took three times the amount of currency deposits it had taken the previous year as central banks around the world became concerned about using commercial banks for their deposits and turned to the Basel institution. In a gold swap, one counterparty, in this case a bank, sells its gold to the other, in this case the BIS, with an agreement to buy it back at a later date. The gold swaps were, in effect, a form of collateral against the US dollar deposits placed by the BIS with commercial banks. Gold is widely regarded as one of the safest assets, but has not been widely used as collateral in the past. Mr Caruana described the transactions as "loans with a guarantee." Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee. George Milling-Stanley, managing director for government affairs at the industry-backed World Gold Council, said: "The gold swaps commercial banks carried out with the BIS demonstrate the effectiveness of gold as an asset class, because even in the depths of the worst liquidity crisis in living memory, institutions with access to gold were able to make use of it to generate dollar liquidity. The issue also feeds right into the current debate among Asian central banks about the lack of assets suitable for use as cross-border collateral." Last year, CME Group, the world's largest derivatives exchange, allowed investors to use gold futures as collateral for some operations. Other institutions, such as central banks, had begun using and requesting gold as collateral in the past two years as perceptions of counterparty risk have risen, bankers and officials said. The gold used in the swaps came mainly from investors' deposit accounts at the European commercial banks. Some investors prefer to deposit their gold in so-called "allocated accounts," which restrict the custodian banks' ability to use the gold in their market operations by assigning them specific bullion bars. But other investors prefer cheaper "unallocated accounts," which give banks access to their bullion for their day-to-day operations. Officials said other commercial banks obtained the gold from the lending market, borrowing bullion from emerging countries' central banks. 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: 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
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| Nomura Sees Fed Issuing QE-Lite Statement On August 10 Posted: 30 Jul 2010 11:27 AM PDT
Just because "extended" and "exceptional" is so H1, 2010. With three brand new doves on the board of the Fed, it was only a matter of time before the printers realized that there is no reason why ZIRP should hold the central bank back, now that even hotdog vendors know all about the deleveraging double dip the US finds itself in. Up on deck we Nomura, which issued the first official change in a call for QE-Light. The firm's economists David Ressler and Zach Pandl, no doubt after consulting with Richard Koo, say, "we now expect the FOMC to 'ease' at the 10 August meeting. Exactly what form this easing might take is debatable. Our assumption is that they will change the language of the statement to signal that the balance sheet will remain expanded, and change policy around the MBS program to start reinvesting paydowns." It won't be the last. Should the Fed telegraph further easing, expect stocks to surge at least another 10% as the 10Y approaches 2.5% as nothing makes sense any more. More from Market News:
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| Posted: 30 Jul 2010 11:00 AM PDT The European stress tests continue to be discussed in the media. The irony is that the stress tests were intended to de-stress the markets. Instead, the response has been all over the place. There were the suspicious:
The smartypants:
The disappointed:
The wishful thinkers:
The book-talkers:
The pragmatic:
And the Daily Reckoners: Bill Bonner, the original Daily Reckoning founder, wrote about what makes a person a Daily Reckoner. Supposedly they are outsiders, people that don't make good small talk and people who do things their own way. They don't conform. So where does that leave us on the judgement of stress tests? Dan discussed this and Bubble Baths on Monday. Andrew Sheets criticism that far more banks would fail a stress test with a 7% capital threshold sort of displays the nature of the flaw in stress testing in the first place. Bank management is all about toeing the line, in terms of liquidity and capital adequacy. That's how profit margins are determined. If the regulator legislates for a 6% tier 1 capital ratio, you sit at whatever the regulators round up to 6% from. Any higher and you could be making more $$$. Any lower and you get a call from the regulators. So the inherent risk in the system isn't about the banks' management of their capital. It's about the regulator's management of banks' capital. And the key question is, where will the capital adequacy percentages sit for the magical constructs of Tier 1 and Tier 2? And how will these Tiers be calculated? In Basel, way back in the heady, more or less respectable days of banking, they came up with answers. The capital adequacy rules and the calculation of the Tiers have changed over time. Basel 1 and Basel 2 were some of the creative names given to the changes. One of the more flawed ideas was to make the Tiers largely dependent on the ratings agencies' ratings. For the limit pushing banks, that meant paying for AAA ratings on their high risk, high return asset base. This allowed their capital base to get the regulatory tick, while real risk and return was much higher than it appeared. Whether the fraud was perpetrated by the banks or the regulators is up to you. Making such activities legal is worse in our opinion, either way. Then reinforcing the lies with "stress tests" is outrageous. Having capital adequacy determined in Tiers will end in tears. Banks should have to define what line they are toeing. That of a high risk, high return bank, or something else. Then people could them judge properly. Apples and Oranges ... and Fruitcakes Nancy Pelosi, the Speaker of the House in the US, has come up with a brilliant way of dealing with Social Security's funding problem:
Pelosi's solution is to pretend funding Social Security isn't relevant:
Think tankers from the The National Center for Policy Analysis disagree:
The Berlin Wall comes to Ocean Grove, Australia A while back we outlined some of the flaws in the green loans program, as well as the government's insulation murders. But poor Julia isn't getting a break. This story from The Age displays another example of stimulus in action - the school building stimulus package:
The Berlin Wall! It would seem Julia's hopes for re-election have been dashed in this particular community. The other shortcomings are a long and impressive list. But the true score remains Julia 1, political accountability 0. Why?
What wonderful timing. And yet it seems Labor has been upstaged by the Americans. Just the Pentagon in fact:
95% is difficult to beat. Although it's not entirely fair to compare politicians with the military. In the global private sector, it seems there aren't many Aussie dominators either. Still, its' convenient to pretend there is for the national budget's revenue. Time to Buy ... and Sell Goings on in the US housing market have been rather odd lately. Considering it was the straw that broke the camel's back last time around, it is worth paying attention. And who knows, it might be important for Australians to find out what a post-bubble housing market looks like.
Ok, so that's not good. Neither is it good that the "Housing Market [is] Still in Basement". Nor that "June Was The Second-Weakest Month On Record" for new home sales. Agora publication The 5 Min Forecast reports that "Prime home borrowers are entering foreclosure at a record clip, according to a report from the firm Lender Processing Services. The number has grown 425% since January 2008, and the biggest increase came just in the last two months. That's a whole lot of inventory that'll be coming on the market soon. And it gets worse..." Worse! It's no wonder that "Home shoppers taking fresh look at renting". Only there seems to be some contradictory evidence to all this gloom and doom.
So we have the lowest number of houses on the market, with the highest amount of houses standing empty... By the way, if you are wondering why "new home sales rose nearly 24 percent in June from a month earlier", well surely you know where to look by now. A tax credit. But why does America need a tax credit when Obama is on the case with his HAMP plan? (Home Affordable Modification Program) Well, because HAMP isn't working. That's not entirely true. It was not working. Now we don't know if it's working or not because "the Obama administration has revised its latest monthly report on its signature foreclosure-prevention plan, deleting a heavily-criticized performance metric used to measure whether assisted homeowners are re-defaulting on their taxpayer-financed mortgages." Heck, why not do away with debt figures too! Going Back in Time Further evidence that the Austrian School of Economics is going mainstream has arrived. This from The Economist:
But why the sudden loss of faith? It's actually not sudden, nor a loss of faith. Instead, economists have gone off on a mathematical rampage during the past 60 years and have learned that this has no merit. In plain English, economists discovered "it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data" (the Lucas Critique), so forecasters looked to equilibrium in their analysis. The idea being that the economy will have a tendency to approach an equilibrium, but be subject to shocks. Now it turns out that didn't work either. "Efficient financial markets" and "rational expectations", which universities taught as overly simplistic, have turned out to be overly simplistic. Who knows why people relied on them for forecasting, knowing this full well. Instead, economists have discovered "Agent-Based Modeling" (ABM).
This reads like an Austrian Economics textbook, except for the "mathematical" and "modeling" parts. Behavioural rules, or principles of action, are the basis of economics Austrian style and non-linear relationships are the inherent implication. But it seems economists haven't quite abandoned their mathematical games. Pretty soon they will find these to be flawed and they might rediscover they are back where they started 60 years ago. Get Her to Keynes The Australian population debate has turned out to be a major election issue. The idea that government should control population is a dangerous one. Seeing as Australia has a lot of "Lebensraum", the politicians have to come up with another reason to interfere in people's lives. How to fill that "Lebensraum" is what they have come up with. Perhaps Julia and Tony should take a close look at a poll released in Die Bild Zeitung recently. 72% of Greek women polled declared that the financial burden of their nation has influenced their sexual life (for the worse). The effect this could have on the Australian population and economic management debates might make all the difference to the election. Claiming to be the better economic manager would discredit a "small Australia" policy... One thing is clear. Even Keynes' stimulus could not improve the Greek women's plight. Something Fishy Going On There has been an important development in the BP oil spill. No, it's not the record loss BP posted. Instead, it seems the oil has disappeared off the face of the earth. Nobody can find it. Except for Shrimper Salvador Cepriano. He has discovered its secret location. "It's in between the bottom and the top of the water." Until next week, Nickolai Hubble.
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| Posted: 30 Jul 2010 10:57 AM PDT
Submitted by RCS Investments Bullish + Mortgage Applications for purchase rose again for the second week in a row and lends more credence that a floor for demand has been formed.
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| Posted: 30 Jul 2010 10:49 AM PDT If you've not already seen the study by Yongheng Deng, Joseph Gyourko, and Jing Wuu that appeared at voxeu the other day and you still think there's not a problem with real estate prices in China, you might want to go read that paper. The one chart that stood out for me is below along with a conclusion that should strike fear into any recent buyer.
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| Are Treasuries The Last Diversifier Left? Posted: 30 Jul 2010 10:29 AM PDT
Luca Di Leo and Darrell Hughes of the WSJ report, U.S. Growth Slowed in 2nd Quarter:
Business spending actually climbed at the fastest rate since 1997, but the big story was the downward revision in the level of real GDP in Q1 2010, a point that Yanick Desnoyers, Assistant Chief Economist at the National Bank, addressed in his comment on the report:
The output gap is deeper than we previously thought, but there is another reason why the Fed will remain on the sidelines for longer than we think: it wants to see asset reflation translate into mild inflation and avoid a protracted deflationary scenario at all cost. Importantly, Fed policy right remains geared entirely towards banks, allowing them to continue borrowing on the cheap to invest in risk assets all around the world as they shore up their balance sheets. This is why I remain bullish on stocks. But what about bonds? I recently wrote a comment asking whether or not we're on the cusp of a global bond hiccup. My point was that global growth will put upward pressure on bond yields, and I thought the US economy was in better shape than what most analysts thought. Obviously today's downward revisions in US GDP will continue anchoring down long-term inflation expectations. Some strategists think that Treasuries are still a buy:
You can watch the interview with Mr. Lamoureux below. His views on financial deflation are echoed in Hoisington Investment Management's Q2 economic letter. Also, his point on diversification is important because in a low interest rate environment, asset classes tend to be a lot more correlated than investors think. With so much pension money flowing into real estate, private equity, commodities, and infrastructure, this should worry us. If a protracted period of deflation does materialize, it will ravage private markets. The Fed will do whatever it takes to avoid such an outcome. Bottom line: We might be in for a long period where both bonds and stocks trade in a range. Better pick your spots carefully.
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| As Long as $1,180 Holds, the Gold Price Will Advance or Move Sideways Into August Posted: 30 Jul 2010 10:15 AM PDT Gold Price Close Today : 1168.40Gold Price Close 23-Jul : 1,187.70Change : -19.3Silver Price Close Today : 17.987Silver Price Close 23-Jul : 18.096Change : -10.9c or -0.6%Platinum 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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Doug Winter US Gold Coin Profiles: Revisiting The 
One of the three known proof 
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