Gold World News Flash |
- BYD Cuts Sales Target, Still Expects Increased Market Share
- Inflationistas Hardier Than Cockroaches
- In The News Today
- Jim's Mailbox
- Hedging Investments: Strategy Alpha Diversification Is the Way to Go
- Friday July Jobs report - Silver/Gold up or down? Place your bets...
- Gulf Oil Spill: The Fed's Big Easy Lies and Spin
- How to Take the Government to the Cleaners
- Africa, Latin America and Energy Development in the Atlantic Basin
- Hourly Action In Gold From Trader Dan
- Major Structural Changes In One Year
- Brian Mok: Gold Dynamics
- Is the Gulf of Mexico already “fixed”?
- Gold Meltdown or Mania - Batten Down the Hatches
- Grandich Client Update – Silver Quest Resources, Let’s Rock
- China Drops Their Oars into the Gold Market
- US FedGov Saves the Day... Technocrats Take Over Greece
- Gold
- From Canaccord’s Morning Coffee Today
- WTF Is Gaffner Doing Writing OpEds?
- Gold and The Terminally Ill Dollar
- US Treasury yields fall to record low on Fed's 'QE lite' plan
- The Lowdown On The Euro?s Relation To The Dollar
- Crude Oil Approaches Key Highs, Gold Wins Despite Investor Liquidation
- House as Bank
- Gold Seeker Closing Report: Gold and Silver End Mixed
- Chile is Looking Hot
- Can the US return to a Gold Standard ? (Alan Greenspan 1981)
- Are Silver Stocks Worth the Effort?
- Ontario Teachers' Bets on Gulf Spill Driller
- Investings In Shadow Dividend Stocks
- The Past, Present and Future of Consumerism in China - An Interview With Karl Gerth
- Gold Price Closes at 1193.7
- SP 500 September Futures Daily Chart; Gold Daily Chart
- Gold Meltdown or Mania – Batten Down the Hatches
- Why Gold Stocks are Certain to Go Higher
- IMF: U.S. Real Estate Sectors Could Bring Banking Crisis 2.0
- Will the gold market will shift to the East?
- Economic Deflation: The Blood on Bernanke's Hands
- Government Subsidies For Bloggers?
- A World of Phony Prices and Twisted Numbers
- 11 Reasons Why The Federal Reserve Is Bad
| BYD Cuts Sales Target, Still Expects Increased Market Share Posted: 04 Aug 2010 06:04 PM PDT Ravi Nagarajan submits: BYD (BYDDF.PK) has announced a 25 percent reduction for its 2010 sales target due to capacity constraints. The company now expects to sell 600,000 vehicles. However, this figure would still represent rapid growth as evidenced by the company’s 63.5 percent growth in domestic Chinese vehicle sales in the first six months of 2010 compared to the same period in 2009. BYD’s growth in China this year would represent a significant increase in market share. Berkshire Hathaway (BRK.A) owns a ten percent stake in BYD and Warren Buffett has described the investment as a bet on BYD Founder Wang Chuan-Fu. Hedge fund manager Li Lu brought the company to the attention of Berkshire Hathaway Vice Chairman Charlie Munger several years ago and made investments in BYD with Mr. Munger through an investment partnership. Mr. Munger later asked David Sokol to conduct additional due diligence on BYD and the results convinced Mr. Buffett to make a large investment for Berkshire. Mr. Munger recently identified Li Lu as one of the leading candidates to manage Berkshire Hathaway’s investments in the future. Mr. Sokol’s role in the BYD purchase was discussed in a recent Fortune magazine article that covered a wide array of topics. Complete Story »
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| Inflationistas Hardier Than Cockroaches Posted: 04 Aug 2010 06:01 PM PDT We thought the inflationistas would back off now that global deflation has ravaged just about every asset class save bullion and T-Bonds for the last couple of years. Actually, they've been pretty quiet lately, even if there are still a few money-supply nuts who believe not only that inflation is, or will be, a concern, but that the deflationist somehow have the big picture wrong.
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| Posted: 04 Aug 2010 05:51 PM PDT Jim Sinclair's Commentary Here we go. $26 billion now. It will pass. This is just for starters. QE is going to infinity as this and the many requests following this have to be financed. $26 billion for states passes key test vote NEW YORK (CNNMoney.com) — The Senate overcame a key procedural hurdle Wednesday to send $26 billion more in federal aid to cash-strapped states. The measure, which passed by a 61-38 vote, contains $16.1 billion in additional Medicaid money and $10 billion to prevent layoffs of teachers and first responders. State officials have been desperately lobbying their representatives, saying they need the money to shore up their budgets. About 30 states had already included the additional Medicaid funds in their fiscal 2011 budgets, which began July 1, and would have to cut further if it doesn't come through. The bill is expected to save 290,000 jobs, according to Senate Democrats. President Obama also weighed in Monday, asking lawmakers to pass the additional assistance to the states, which has been kicking around Congress in various forms for months. Senate Democrats needed to garner at least 60 votes for the measure to pass this initial vote, meaning some Republicans had to cross the aisle. That help came in the form of Maine Republicans Susan Collins and Olympia Snowe. A final vote could come late in the week, just before the Senate is scheduled to recess for the long August break. The chamber will vote before it leaves town, a Senate Democratic leadership aide said.
Jim Sinclair's Commentary Like the 1950s science fiction movie, "The Blob," OTC derivatives, whatever the flavor of the day, continue to grow and grow. Nothing has been cured and the potential for a second and more shocking economic event is real and in the present time. Global Interest Rate Derivative Volume Near $450 Trillion End-June NEW YORK (Dow Jones)–The total outstanding notional amount for all interest rate derivative transactions reported by the 14 major dealers including Goldman Sachs & Co, Morgan Stanley and J.P.Morgan was $449.202 trillion as of June 30. The data were compiled by TriOptima, an infrastructure provider for the over-the-counter derivatives markets, which runs the global data warehouse for the derivatives markets. The global data collection is a key element of efforts to bring more transparency to the derivatives markets that were at the heart of the financial crisis. Detailed reports are submitted monthly to regulators; public reports contain the aggregated data. Policy makers in major economies have pushed for derivatives to trade in exchanges and settle through central clearing houses. In the U.S., the Congress just passed the biggest financial regulatory overhaul since the Great Depression including tighter rules on derivatives. TriOptima said that 74%, or $332.237 trillion, of the notional total was made up of interest rate swaps, which allow companies and banks to exchange fixed-rate interest payments for floating rate payments as a way to hedge their exposure to fluctuating rates or bet on the direction of interest rates. Other interest rate derivatives include currency swaps. Other major dealers in rate derivatives markets are Barclays Capital, BNP Paribas, Bank of America-Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank AG, HSBC Group, The Royal Bank of Scotland Group, Societe Generale, UBS AG and Wells Fargo Bank.
Jim Sinclair's Commentary You have to love the made up stories on reasons why gold does anything. It should read shorts on the floor cover for technical reasons. Money flows support potential for a hyperbolic rally soon. Gold Tops $1,200 on China Shift NEW YORK—Gold futures climbed to their highest levels in almost two weeks, supported by sustained physical buying and speculation about stronger demand from an expanded Chinese market. The most actively traded contract for December delivery rose $16.20, or 1.4%, to $1,203.70 an ounce on the Comex division of the New York Mercantile Exchange. Prices have advanced for five straight sessions, lifted by bargain
Jim Sinclair's Commentary Round and round we go for a new economic experience in the Western World and a state of the USA. Japan with "QE to infinity" will result in currency induced cost push hyperinflation, perhaps everywhere except Asia and certain African countries. Japan PM hints at additional economic stimulus TOKYO — Japanese Prime Minister Naoto Kan on Tuesday said he would consider whether additional steps to boost the economy are needed amid fears Japan's recovery is losing steam. "The labour situation is still severe and economic conditions overseas have not necessarily stabilised," Kan, who took the leadership less than two months ago, told a budgetary committee of the parliament's lower house. "We have come to a point where we will have to consider whether taking action in any way is necessary," he said after a lawmaker urged the government to take additional measures to stimulate the economy. Japan limped out of recession in spring 2009 but its recovery has been fragile, with recent data pointing to signs that export- and stimulus-led recovery may be stalling. Last week the government said that unemployment had ticked up to 5.3 percent in June, the highest level since November and above market expectations of 5.1 percent.
Jim Sinclair's Commentary The age of miracles is not over. U.S. Finds Most Oil From Spill Poses Little Additional Risk WASHINGTON — The government is expected to announce on Wednesday that three-quarters of the oil from the Deepwater Horizon leak has already evaporated, dispersed, been captured or otherwise eliminated — and that much of the rest is so diluted that it does not seem to pose much additional risk of harm. A government report finds that about 26 percent of the oil released from BP's runaway well is still in the water or onshore in a form that could, in principle, cause new problems. But most is light sheen at the ocean surface or in a dispersed form below the surface, and federal scientists believe that it is breaking down rapidly in both places. On Tuesday, BP began pumping drilling mud into the well in an attempt to seal it for good. Since the flow of oil was stopped with a cap on July 15, people on the Gulf Coast have been wondering if another shoe was going to drop — a huge underwater glob of oil emerging to damage more shorelines, for instance. Assuming that the government's calculations stand scrutiny, that looks increasingly unlikely. "There's absolutely no evidence that there's any significant concentration of oil that's out there that we haven't accounted for," said Jane Lubchenco, head of the National Oceanic and Atmospheric Administration, the lead agency in producing the new report.
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| Posted: 04 Aug 2010 05:50 PM PDT Where there's smoke, there's fire The Achilles heel of the paper market is physical possession. Where there's smoke, there's fire. A rough rule of thumb I follow is that once is a coincidence and twice is a pattern. There has been a run on COMEX silver inventories since June 16. Now there are strange developments with COMEX gold inventories. There were unusual movements of COMEX gold inventories on July 28 and July 30 that 1) coincidentally roughly equaled what was needed for the sellers of contracts to meet delivery requirements, and 2) may indicate that unusually large quantities of COMEX gold will be withdrawn by the end of August. Source: numismaster.com
Greetings Jim! Last week, we identified the development of a Short-Term Cycle Low (STCL) in gold on July 28, suggesting that the likely formation of a bottom had begun. In order to confirm that the latest cycle low was in place, we needed to see additional strength in the gold market this week, and we have received that confirmation.
We were also within the window during which the next Intermediate-Term Cycle Low (ITCL) was scheduled to occur, and the continued strength this week indicates that it is likely the ITCL has formed as well.
It is still too early in the intermediate-term cycle to confirm that the new ITCL is in place, but if price action continues to consolidate in this area or move higher, gold should experience several weeks of strength as both short-term and intermediate-term cycles will be synchronized and therefore supportive of the rally. The character of the July correction in gold has actually been relatively bullish from a long-term perspective, as the sharp break lower early in the month was unable to produce a significant amount of downward momentum during subsequent weeks.
If gold is able to complete the formation of a short-term bottom in this area and then move back up toward the recent all-time high, a bullish consolidation formation would develop, signaling the likely continuation of the long-term uptrend via another breakout in either late August or September. A move above new congestion resistance near $1,212 would be the first important step in the formation of that continuation pattern. Best, CIGA Erik
Gold Tops $1,200 on China Shift You have to love the made up stories for reason why gold does anything. It should read shorts of the floor cover for technical reason. Money flows support potential for hyperbolic rally soon. Jim Gold futures climbed to their highest levels in almost two weeks, supported by sustained physical buying and speculation about stronger demand from an expanded Chinese market. Headline explanations or logic remind of the observation that truck pulling a riding lawnmower past freshly mowed grass had to have cut it. It doesn't matter that the cutting widths are completely different. The headline noise obscures the movement behind the curtain. As Jim suggests, connected money is repositioning into weakness in anticipation of the next advance. This is discussed in further detail in my The Management of Gold commentary. I would like to add an additional note on silver. JP Morgan's large short position in silver, partially acquired through its acquisition of Bear Stearns and discussed by Ted Bulter in the following kingworld interview kingworldnews.com, needs to be covered. There's no way JP Morgan will be left holding the bag during a parabolic move. The following chart reveals the work that needs to be done in silver. Silver London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest: Eric
Planned layoffs edge up in July: Challenger The number of planned layoffs at U.S. firms rose 6 percent in July, marking the third straight month of increased layoffs, though downsizing activity appears to be slowing, a report on Wednesday showed. Announced layoffs (ALO) have fallen into a zone in which a rebound (more layoffs) tends to occur. Also, the violation of the first down trend line in velocity supports an eventual turn in the ALO. A violation of the 2009 down trend line would confirm, what capital markets have already begun to reflect, the need for another round of quantitative easing (QE). Challenger, Grey, and Christmas Announced Layoffs (ALO) And YOY Change: Source: news.yahoo.com
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| Hedging Investments: Strategy Alpha Diversification Is the Way to Go Posted: 04 Aug 2010 05:37 PM PDT Veryan Allen submits: Hedge Fund began five years ago today. It's been great meeting and dialoging with many interesting people I might never have connected with. Initially I posted daily but outside the blogosphere I was helping investors make money and reduce risk. Developing portfolio rescue strategies and pension liability solutions also takes time. Despite vastly superior performance, hedge funds continue to be misunderstood. Some still blame them for downturns. Causality is cloudy: did EWP have a good month due to "stress tests" or soccer success? Stocks might eventually go up (or down) but why wait decades to find out? Complete Story »
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| Friday July Jobs report - Silver/Gold up or down? Place your bets... Posted: 04 Aug 2010 05:28 PM PDT hi all, since jobs reports are friday. we all know its gonna be bad. but how do you think this affects gold/silver? in a normal market without manipulation it should be going up right? Or do i have it wrong? very confused. please state why u think it would go in that direction. thanks
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| Gulf Oil Spill: The Fed's Big Easy Lies and Spin Posted: 04 Aug 2010 05:13 PM PDT By Jim Polson and Allison Bennett The "vast majority" of crude from BP Plc's damaged Gulf of Mexico well is gone and the rest is being broken down by waves and bacteria, reducing the threat of further pollution from the largest maritime oil spill, White House energy adviser Carol Browner said. "The vast majority of the oil [...]
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| How to Take the Government to the Cleaners Posted: 04 Aug 2010 04:57 PM PDT By Dr. Steve Sjuggerud Wednesday, August 4, 2010 Last month, I told you the folks at the U.S. Federal Reserve – the people who set short-term interest rates in the U.S. – showed us their cards… In short, Fed Chairman Ben Bernanke will keep money as "easy" as possible, for as long as possible. And interest rates will remain below 1% for longer than anyone else believes… This will create new bubbles. Bernanke won't care… They'll just be the collateral damage of his efforts to fix the U.S. economy. Where will the new bubbles form? Whenever the Fed cuts short-term interest rates wildly below long-term interest rates, the first place you have to consider speculating is… Hong Kong. You see, the Hong Kong dollar is pegged to the U.S. dollar. Because of the specific way the Hong Kong dollar is pegged (it's called a "currency board"), Hong Kong is stuck with whatever the U.S. policy is on interest rates. The thing is, the U.S. int...
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| Africa, Latin America and Energy Development in the Atlantic Basin Posted: 04 Aug 2010 04:57 PM PDT Recently, I had a long talk with Ali Moshiri, President of Chevron Africa and Latin America Exploration and Production Company. Mr. Moshiri been has been working for Chevron for over 30 years. He's one busy man, whose responsibilities begin in the southern waters of the Gulf of Mexico and extend to the cold reaches of the southern Atlantic Ocean. In our talk, Mr. Moshiri and I looked at the future of offshore oil and gas exploration and development. Here's part of what we discussed, with more to come in future articles. BWK: Mr. Moshiri, you run a division of Chevron that includes Africa and Latin America. How much oil and gas do you pull out of the ground every day? AM: For Africa and Latin America, on a gross basis, Chevron is producing somewhere around 840,000 barrels per day. BWK: That's about 1% of all the oil that the world uses every day, at 85 million barrels per day. Can you say some more about what's happening in the areas with which you deal? AM: (My area is ) the Atl...
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| Hourly Action In Gold From Trader Dan Posted: 04 Aug 2010 04:57 PM PDT View the original post at jsmineset.com... August 04, 2010 10:59 AM Dear CIGAs, Click chart to enlarge today's hourly action in Gold in PDF format with commentary from Trader Dan Norcini ...
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| Major Structural Changes In One Year Posted: 04 Aug 2010 04:57 PM PDT by Jim Willie CB August 4, 2010 home: Golden Jackass website subscribe: Hat Trick Letter Jim Willie CB, editor of the “HAT TRICK LETTER” Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. A theme of frequent mention has been the Paradigm Shift in the financial world. It refers more specifically to the global shift away from a USDollar...
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| Posted: 04 Aug 2010 04:57 PM PDT Source: Brian Sylvester of The Gold Report 08/04/2010 Union Securities Analyst Brian Mok gets excited about gold companies with prospects for big-time growth. But then again, who doesn't? In this exclusive interview with The Gold Report, Brian discusses at length, and offers target prices on, no less than five juniors headed for big increases in gold production. The Gold Report: Tell me how a strong gold price is changing the companies that you cover. Brian Mok: Obviously, a strong gold price bodes well, but really, it's a double-edged sword. You have the nice, high gold price, but the companies I'm currently looking at have functional currencies that inversely correlate to the U.S. dollar. You get the rise in the gold price, but unfortunately, you also get a rise in costs that offsets some of the impact the strong gold price brings to cash flow. That's what I'm finding right now. TGR: But have you seen a change in the type of company you're covering? It's not so much...
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| Is the Gulf of Mexico already “fixed”? Posted: 04 Aug 2010 04:57 PM PDT The 5 min. Forecast August 04, 2010 09:54 AM by Addison Wiggin & Ian Mathias [LIST] [*] Oil spill takes “surprise” turn… more than 75% spilt oil already gone [*] One U.S. city doing way better than most expect: Vegas [*] China makes moves to popularize gold investment… gold ETF for Chinese investors on the horizon [*] Plus, a bizarre bull market: Bacon [/LIST] Despite headlines screaming “the worst oil spill in history,” it turns out the BP blowout disaster wasn’t really as big a deal as you’d have thought. Oh, well… sorry. According to the feds, 74% of all the oil leaked into the Gulf has already been removed. “Much of the rest,” The New York Times summarizes a government report released today, “is so diluted that it does not seem to pose much additional risk of harm.” Nearly half -- 41% -- of the oil simply “evaporated, dissolved...
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| Gold Meltdown or Mania - Batten Down the Hatches Posted: 04 Aug 2010 04:57 PM PDT by Louis James, Senior Editor, Casey's International Speculator As Doug Casey said recently, we expect things to come unglued soon. With the ongoing madness in Europe, it seems to me that things are starting to look visibly less well glued already. In contemplating the possibility of another stock market meltdown, it seems important to me that in spite of the exuberance with which investors rushed back into the market over the last year, the memory of 2008 remains vivid, tempering enthusiasm with caution. For example, the market still has relatively little appetite for early-stage, grassroots exploration projects; by our latest estimates, Mr. Market is willing to pay on the order of ten times more for Proven & Probable ounces in the ground than for less certain resource categories. With this evidence of caution in mind, and the great unwinding of the broader credit markets well underway, it seems likely that our sector is less leveraged than it was befo...
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| Grandich Client Update – Silver Quest Resources, Let’s Rock Posted: 04 Aug 2010 04:57 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! August 04, 2010 08:17 AM SQI has been rocking and rolling of late and this news of 109 g/t gold sample from Prospector Mountain makes me want to say “Let’s rock”. [url]http://www.grandich.com/[/url] grandich.com...
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| China Drops Their Oars into the Gold Market Posted: 04 Aug 2010 04:57 PM PDT Well, I wouldn't read a heck of a lot into Tuesday's gold price action. The upward move that gold made yesterday, began at the Hong Kong close... which also happens to be the London a.m. gold fix... at 10:30 a.m. local time. From the fix, gold rose to around $1,187 spot... and basically stayed around that price for the rest of the day... with the spike high of the day [$1,191.90 spot] occurring shortly before 11:30 a.m. in New York trading. All three attempts that gold made to break above $1,190 spot yesterday were quietly, but firmly, turned back. Volume was very light. Here's the New York Spot Gold [Bid] chart so you can see the New York action in more detail. Silver's price path was very similar to gold's... with the high of the day [$18.64 spot] coming about fifteen minutes after gold's high... which was shortly before lunchtime in New York. And, like Monday, silver got sold down starting right after the high price was in. The wo...
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| US FedGov Saves the Day... Technocrats Take Over Greece Posted: 04 Aug 2010 04:57 PM PDT US FedGov Saves the Day Wednesday, August 04, 2010 – by Staff Report Timothy Geithner Welcome to the Recovery ... We have a long way to go to address the fiscal trauma and damage across the country, and we will need to monitor the ups and downs in the economy month by month. The share of workers who have been unemployed for six months or more is at its highest level since 1948, when the data was first recorded, and we must do more to ensure that they have the skills they need to re-enter the 21st-century economy. Small businesses are still battling a tough climate. State and local governments are still hurting. These are considerable challenges, but we are in a much stronger position to face them today than when President Obama took office. By taking aggressive action to fix the financial system, reduce growth in health care costs and improve education, we have put the American economy on a firmer foundation for future growth. And as the president sa...
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| Posted: 04 Aug 2010 04:57 PM PDT courtesy of DailyFX.com August 04, 2010 07:44 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 in an impulsive fashion. The short term count has changed slightly. It seems as though the first 5 wave decline ended following a terminal thrust from a triangle. Expectations are for strength towards 1208/1220 before gold rolls over and plunges in a larger 3rd wave. 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@dailyfx.com"]jsaettele@dailyfx.com[/EMAIL]....
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| From Canaccord’s Morning Coffee Today Posted: 04 Aug 2010 04:57 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! August 04, 2010 05:16 AM “The moment many gold bulls have been waiting for…” Financial blog Zero Hedge made this statement after learning that the Chinese Central Bank has released a directive informing everyone it is commencing the development of a healthy gold market. In the release, the People's Bank of China (PBoC) stressed the need to develop the market to serve the overall situation of China’s gold industry, based on improving the competitiveness of China’s financial markets, effectively strengthening innovation, and promoting the formation of a multi-level market system. Reportedly, the PBoC has asked the Shanghai Gold Exchange, Shanghai Futures Exchange and commercial banks to become actively engaged in developing a national gold market. Zero Hedge highlighted, “With China owning a mere 1,064 tonnes ...
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| WTF Is Gaffner Doing Writing OpEds? Posted: 04 Aug 2010 04:57 PM PDT Market Ticker - Karl Denninger View original article August 04, 2010 04:21 AM I mean, you can't possibly be serious... [INDENT]The recession that began in late 2007 was extraordinarily severe, but the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery. [/INDENT]Really? A 2% annualized contraction year/over/year is "extraordinarily severe"? May I ask what you're smoking Turbo Timmy? Oh, I don't have to. You're smoking the bone labeled "Debt-based Ponzi Leverage." And you're scared to death - because your little game isn't working, and you're also well-aware what's around the corner. Now for the individual lies: [INDENT]• Private job growth has returned — not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months....
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| Gold and The Terminally Ill Dollar Posted: 04 Aug 2010 04:57 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! August 04, 2010 04:15 AM We’re at some key technical points on gold and the U.S. Dollar. Gold is very close to giving an MACD buy signal. A close above the 50-Day M.A. just above $1,210 would also likely lead to some serious short-covering. The news out of China and elsewhere that gold demand is very strong comes as no surprise especially since “Tokyo Rose” has claimed the opposite forever. The 80 area on the U.S. Dollar Index is critical support and is being tested as we speak despite an already very oversold condition. Closes below 80 could bring on a wave of dollar selling. No matter what the “Don’t Worry, Be Happy” propaganda tries to tell you about the U.S. Dollar, the reality of Uncle Sam is this: [url]http://www.grandich.com/[/url] grandich.com...
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| US Treasury yields fall to record low on Fed's 'QE lite' plan Posted: 04 Aug 2010 04:57 PM PDT August 03, 2010 02:15 PM - Short-term US Treasury yields drop to historic lows on mounting expectations of extra stimulus from the Fed. Read the full article at the Telegraph......
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| The Lowdown On The Euro?s Relation To The Dollar Posted: 04 Aug 2010 04:57 PM PDT View the original post at jsmineset.com... August 03, 2010 05:53 PM Dear Friends, I have received a fair number of emails asking me what is going on with the Euro in relation to the Dollar, especially considering the fact that a mere few weeks ago it was pronounced dead and the European monetary union with it. What appears to have happened is two-fold: First, those Euro zone areas that were causing the most trouble, Greece, Spain, Portugal, etc. seem to have been able to sell their bonds, alleviating fears of a sovereign debt meltdown (for now). We all know that a tremendous amount of behind-the-scenes machinations were occurring by the Central Banks and the monetary authorities to insure that the bond sales were not a dismal flop. The repercussions of such would have indeed been earth shattering to say the least. Secondly, and most importantly, were the comments coming from several US Federal Reserve officials, including Chairman Bernanke, who laid to rest any fears among the hed...
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| Crude Oil Approaches Key Highs, Gold Wins Despite Investor Liquidation Posted: 04 Aug 2010 04:57 PM PDT courtesy of DailyFX.com August 03, 2010 07:00 PM Crude oil advanced further above $80, as the commodity shrugged off weak U.S. economic data and a selloff in equity markets. Likewise, gold shrugged off a notable drop in ETF holdings to register its fifth gain in as many sessions. Commodities – Energy Crude Oil Approaches 11-Month Highs Crude Oil (WTI) $82.37 -$0.18 -0.22% Commentary: Despite poor economic data and sinking equities, crude oil rose $1.21, or 1.49% in Tuesday’s session. Personal income and spending data for the U.S. both came out unchanged month-over-month. While the spending data was expected to be unchanged, income was forecast to rise 0.1%. Also released on Tuesday was U.S. factory orders for June, which fell 1.2% versus the 0.5% decline that was expected. U.S. equities shed 0.50% on the day, but the move was fairly benign considering the steep 2% gain in the prior session. Perhaps because the down move in equities was ...
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| Posted: 04 Aug 2010 04:48 PM PDT Here's a riddle for your Thursday: how much of Australian retail consumption has been/is being supported by high house prices? It's a little research project we're working on and if you have any suggestions, don't be shy about sending them into to dr@dailyreckoning.com.au. Why bother? It's a given that increases in household wealth support higher consumer spending. For one, when people see their share portfolios or housing investments go up, they are, in fact, richer on paper. This may give them more disposable income to actually spend. Or maybe they just feel richer and spend more freely (the wealth effect). But one thing we recall seeing at the peak of the U.S. housing bubble is a massive increase in borrowing against home equity. Home equity lines of credit (HELOCs) were a popular way for lenders to expand the lending boom and for borrowers to "cash in" on rising house values to support consumption. The house was an ATM. Is that true in Australia? We're looking for evidence that either confirms or refutes the thesis. But we're having a hard time finding credible data. One area that you might look at, based on the U.S. experience, is refinancing activity. Why? As rates bottomed in the U.S., and then as the fear that rates would rise took hold, millions of people refinanced their homes to take advantage of low rates. Often the refis captured much higher house prices, which meant the new mortgage was larger than the old mortgage, albeit it a lower interest rates (and much less actual equity for the borrower). Many mortgage providers offered cash-out refinancing options which allowed you to "extract equity" from your asset, an asset which was rising in value anyway. A telling sign of the top in U.S. home prices was when refi activity eclipsed new mortgage finance. There weren't as many new buyers. Just existing buyers trying to reshuffle the financing furniture in order to support consumption and put off the mortgage day of reckoning. Granted, we have no idea if anything like that is happening yet in Australia. But we're having a look. In the meantime, median house prices were up 3.1% in the June quarter, according to data from the Australian Bureau of Statistics. The year-over-year gain in capital cities, according to the ABS was 18.4%. That data is in conflict with data from RP Data Property reports. The RP data showed just 0.1% rise in house prices in the June quarter and a 0.7% fall in prices for the month of June alone. The RP data includes units and townhouses as well as stand-alone homes. That drop, if confirmed, would be the first monthly drop in 17 months. Of course you know our position on the whole thing: Australian house prices are just one of many manifestations of leveraged asset bubbles worldwide that are now deflating with the credit depression. It has to make Aussie banks incredibly nervous. On the one hand, they have large exposure to commercial and residential real estate. On the other, much of their domestic lending is dependent on wholesale borrowing internationally, where the cost of capital is going up faster than the Reserve Bank is raising the cash rate. And there's an election this month, which makes it really hard to raise mortgage rates independent of a hike in the cash rate without inviting a "super profits" tax down on your head from agile political pick pockets. But for all this worry that falling asset prices will lead to falling retail spending, lower GDP growth, and bigger government budget deficits, by far the most interesting housing bubble going right now is in China. Chinese regulators are instructing banks to conduct an honest-to-goodness stress test in which banks reckon the impact of a 60% fall in residential house prices. Wow! Sixty percent? That travishamockery of a European stress test didn't even assume a default on sovereign debt, just lower growth and falling bond prices. The Chinese appear to be seriously wondering what would happen if a large portion of last year's $1.4 trillion in new lending turns out to be lost or non-performing. Bloomberg reports that, "A deep slump in China's property market may further slow the nation's economy, which grew at a less-than-forecast 10.3 percent pace in the second quarter. China is still the fastest growing major world economy. Concern that China's economy may cool due to a real-estate slump erased an early rally in U.S. stocks." The prospect of loan losses as a result of house price crash in China would be bad news for Chinese banks. And while we concede there's probably a lot we don't' know about the Chinese property market, Caixin analyst Andy Xie reckons there are enough empty apartments in China to house nearly 200 million people, which is a lot of people and suggests a lot of bad loans. Of course, only in China could you say that it may be possible to absorb that amount of space through internal migrations off the farm and into the city. In other words, if you really worked at it, you could say that that much surplus housing inventory isn't an issue in a country that has so many people on the move. Sooner or later someone's going to buy it and move in, right? We'll see about that. But in the meantime, the issue for Australian investors - and companies like Rio Tinto, which is set to spend nearly a billion dollars expanding its iron ore capacity in the Pilbara - is whether China's housing boom has been boosting demand for coal and iron ore and what would happen to that demand if the boom goes bust. Remember, last week we relayed the startling statistic that Chinese banks could struggle to recoup nearly 23% of the loans made to finance local government infrastructure projects. This aspect of China's credit boom may have been even more supportive of base metals and iron ore prices. And if it goes, then the index of commodity prices published by the RBA this week (with a heavy bias to the contract prices of coal and iron ore) might look more like a "M" this time next year.  If you read the RBA release you'll see that the big increase (51%) in the index is largely based on estimated increases in iron ore, coking coal, and thermal coal prices. It's an expectation that things will keep chugging along. These estimates, in turn, are used by both political parties in Australia to estimate the amount of revenue generated by royalties and/or the Mineral Resource Rent Tax. Both parties reckon a return to surplus based on the increases in commodity prices. Hmm. Has anyone reckoned what would happen if prices fell as they did in 2008 and beyond? Granted, with oil hovering at US$82, gold nearly $1,190, and speculators in the position to take advantage of easy money in the US and Japan to invest in higher yielding assets, it may not seem like commodity prices can actually fall. But if the big driver behind commodity prices for the rest of this year is speculation and not fundamental demand (because bubbles are popping all over the joint) then would you be an investor in resource shares right now, or just another speculator? Mind you, there's nothing wrong with speculation, as long as you know that's what you're doing. It's when the price signals you've been given turn out to be bogus (because of funny money) that many people find out they were actually speculating and not really investing. See Bill's note below on prices. All that said, we reckon shares would certainly be a better inflation hedge than bonds over the long term. But you might have to wait an awfully long time for a rebound in corporate earnings to start pushing share prices up. We meant to expand on this discussion this week with a look at various "alpha" and "beta" strategies for the share market. But we've almost run out of week. For now, we'd say that all this anxiety about deflation and falling prices and the inability of monetary policy to produce inflation is just a prelude. The inflation will come when the Fed finds unconventional ways to get money into people's pockets by by-passing the banks altogether. There are ways. And then? Stay tuned! Dan Denning
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| Gold Seeker Closing Report: Gold and Silver End Mixed Posted: 04 Aug 2010 04:30 PM PDT Gold climbed steadily higher in Asia and London and rose to as high as $1202.90 by about 9:40AM EST before it fell back off in the last few hours of trade in New York, but it still ended with a gain of 0.71%. Silver climbed to as high as $18.688 by midmorning in New York, but it then fell off rather markedly in afternoon trade and ended near its late session low of $18.227 with a loss of 0.81%.
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| Posted: 04 Aug 2010 04:27 PM PDT
It is an old trading adage that if you throw bad news on a market and it doesn’t go down, you buy it. That has happened in spades in this prosperous Latin American country, when the ETF barely backed off a peso after it was devistated by a massive 8.8 magnitude earthquake in February that caused $32 billion worth of damage. While I have seen too many emerging nations blow their mineral wealth on ornate palaces, fast cars, and faster women, and stash the rest in secret Swiss bank accounts, that is not the case with Chile. Looking at the country’s finances is a breath of fresh air. Of course, the 800 pound gorilla in the room is copper, for which it is the world’s largest supplier, and generates one third of its GDP. Chile has had the good luck to be run by a government that took windfall prices from copper’s meteoric price rise over the last decade and poured it into development projects and debt reduction. It runs a debt to GDP of only 6%, compared to 60% in the US, and 140% in troubled Greece. While corruption is rampant in much of the continent, the newly elected president, Sebasti&cute;n Piñera, is already a self made billionaire, having made a fortune introducing credit cards to the country during the seventies. So what’s the point? You don’t get a more pro business leader than that. The country’s demographic pyramid looks good until 2017, when a rapid shrinking of its fertility rate starts to bite (click here for why this is important at http://www.madhedgefundtrader.com/april_12__2010.html ). It is already approaching US fertility levels of 2.1, barely the replacement rate. Prior to the earthquake, GDP growth for the previous two quarters came in at an explosive 11.3% and 13.7% annualized rates. Many analysts believe the full year rate will come in as high as 5.5%. With reconstruction now getting underway, the central bank is expected to raise interest rates to keep the economy from overheating, likely leading to a stronger Chilean peso. Rising revenues and an appreciating currency give investors a “hockey stick” effect that I am always looking for in international trading profits. Think Canada, Singapore, and Australia. And get this: even though the government is running a budget surplus, it raised taxes to pay for the rebuild. Perish the thought! I recommended Sociedad Quimica Y Minera (SQM) last year, the country’s largest lithium producer for batteries (click here for the call at http://www.madhedgefundtrader.com/april_2__2009.html ), with spectacular results. Ironically, Chile’s ETF (ECH) is dominated by utilities and has no direct mining exposure, as they are all government owned, such as the giant CODELCO. That will change if privatizations begin. But Dr. Copper’s footprint in the country is so big, you can’t help but participate, even if indirectly. With China on a tear to accumulate more of the red metal for its own infrastructure build out, that looks like a good bet. To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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| Can the US return to a Gold Standard ? (Alan Greenspan 1981) Posted: 04 Aug 2010 04:00 PM PDT
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| Are Silver Stocks Worth the Effort? Posted: 04 Aug 2010 03:36 PM PDT Silver: The physical metal in your very own hands negates any third party risk and from time to time does perform better than the stocks.
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| Ontario Teachers' Bets on Gulf Spill Driller Posted: 04 Aug 2010 03:22 PM PDT
Karen Mazurkewich of the National Post reports, Teachers bets on Gulf spill driller:
It's funny because today I commented on Zero Hedge that big hedge funds are also scooping up shares of Transocean (RIG). I was looking at the holdings of Tudor Investment on Tickerspy and noticed they hold Transocean shares (click image to enlarge):
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| Investings In Shadow Dividend Stocks Posted: 04 Aug 2010 02:42 PM PDT eChristian Investing submits: Stories about the bleak housing market have filled the news headlines for the past three years. It’s almost hard to remember back to the heydays of 2005-2006 when real estate was the hottest investment since internet IPOs. Unfortunately now all we hear is bad news and many don’t expect a recovery for several more years. One of the factors holding back a recovery in the housing markets is the tremendous “shadow inventory”. Shadow inventory in the housing market refers to the number of homeowners that would like to list their house for sale, but market conditions, financial circumstances or a host of other reasons keep them from doing so. These homes are not included in the current inventory of available homes for sale, but it is understood that this “shadow inventory” represents a large number of homes that will come onto the market if certain circumstances are met. In the world of dividend investing, there is a similar parallel with what we affectionately refer to as “shadow dividend stocks”. These companies currently do not pay a dividend to investors, but they have all the criteria to make a great dividend stock. These companies generate significant free cash flow, impeccable balance sheets with growing cash balances and consistent earnings growth. All of which are fundamental criteria that a good dividend investor looks for when evaluating a stock. The only thing that seems to be missing is the actual dividend. For investors who need current income, this is obviously a major issue. However, many investors look to dividend stocks not just for the income, but because these stocks have consistently outperformed the overall market returns. These companies have strong cash flows and a high degree of confidence in future cash flows to consistently pay and even increase their dividend payments. Investing in stocks that meet these criteria, but don’t yet pay a dividend is an intriguing option to these investors. Apple (AAPL) is prime example of a shadow dividend stock. The company generated $4 billion in cash last quarter and has over $24 billion in cash. The company has been consistently growing their earnings and few doubt their ability to continue to do so given their strong product pipeline. The only problem is that Apple doesn’t pay a dividend. They’ve also given no indication that they will do so in the foreseeable future, despite the fact that Apple CEO Steve Jobs makes a living off dividend income. However, for long-term investors that don’t need immediate income, Apple represents the type of cash cow that you love to have in your portfolio. Even if Apple paid out only 50% of their current cash flows, this shadow dividend stock would yield 3-4%. Cisco Systems (CSCO), Google (GOOG) and to a lesser extent Adobe Systems (ADBE) all fit into this category. Shadow dividend stocks aren’t restricted to the technology sector either: Chipotle Mexican Grill (CMG) has generated $87 million in free cash flow in the first half of 2010 despite opening 45 new stores this year. Big Lots (BIG) expects to generate $220 million in cash flow this year. Celgene (CELG) has over $3 billion in cash on their balance sheet and that has grown nearly $120 million since the beginning of the year. While Family Dollar Stores (FDO) is a dividend aristocrat that has increased their dividend for 34 consecutive years, competitor 99¢ Stores (NDN)pays no dividend despite generating $75 million in operating cash flow last quarter. These stocks are all attractive because of their ability to generate strong, future cash flows. Even if they don’t currently pay a dividend, these shadow dividend stocks have the potential to reward investors in the future.
Complete Story »
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| The Past, Present and Future of Consumerism in China - An Interview With Karl Gerth Posted: 04 Aug 2010 02:42 PM PDT Joel Backaler submits: In order to understand the future trajectory of China’s domestic consumer market, it’s important to gain an understanding of the historical context of consumerism in China. Karl Gerth is a professor at the University of Oxford who teaches modern Chinese history with an emphasis on consumer culture. He brings a truly unique perspective combining both a deep understanding of contemporary Chinese history with actionable business insight for the present day and beyond.
Complete Story »
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| Posted: 04 Aug 2010 02:20 PM PDT Price Close Today : 1193.70 Change : 8.50 or 0.7% Silver Price Close Today : 18.263 Change : (0.144) cents or -0.8% Platinum Price Close Today : 1581.30 Change : 1.20 or... 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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| SP 500 September Futures Daily Chart; Gold Daily Chart Posted: 04 Aug 2010 02:15 PM PDT | |||
| Gold Meltdown or Mania – Batten Down the Hatches Posted: 04 Aug 2010 02:05 PM PDT by Louis James, Senior Editor, Casey's International Speculator As Doug Casey said recently, we expect things to come unglued soon. With the ongoing madness in Europe, it seems to me that things are starting to look visibly less well glued already. In contemplating the possibility of another stock market meltdown, [...]
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| Why Gold Stocks are Certain to Go Higher Posted: 04 Aug 2010 02:05 PM PDT By Jordan Roy-Byrne, CMT Certain may not be the best word to use in a post-bubble world. Is anything truly certain? Ok maybe not. If you don't like certain then lets replace it with "highly probable." So why is it highly probable that gold stocks will go higher? Let me digress for a moment. [...]
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| IMF: U.S. Real Estate Sectors Could Bring Banking Crisis 2.0 Posted: 04 Aug 2010 02:05 PM PDT
By Dian L. Chu, Economic Forecasts & Opinions
Market perception of sovereign risk, sluggish growth, and mounting fiscal deficits and debt are also identified as major risks to the economy and the financial system. IMF noted financial institutions will face rollover risks with large loan maturities in 2011–13, which could bring rapidly rising foreclosures and bank losses. The small and medium-sized banks, which are most heavily exposed to the commercial real estate sector, are causing the most concern.
IMF also noted the securitization market could become a drag on the economic recovery:
And to make things even more depressing, IMF warned that
Other research reports also paint an equally gloomy picture. According to an analysis by Realpoint, reported by HousingWire, delinquencies in commercial mortgage -backed securities (CMBS) in the US increased to 7.2%, and more than triple the rate a year ago. In May, the total delinquent unpaid balance for these loans reached $57.3 billion. Realpoint forecasts by the end of 2010, the total amount of unpaid principal balance could grow between $80 billion and $90 billion, and the delinquency rate could reach as high as 12%. Earlier in the year, Trepp reported that these spiking delinquencies could cause bank failures to increase as much as 30% in 2010 (You think we don’t have enough problem banks bankrupting FDIC already? see Figure 3)  While the $40-80 billion capitalization numbers probably will not take the entire U.S. economy into a double-dip recession, they will likely put a significant drag on GDP and earnings in the financial sector, as well as the broader equity market for the next two to six quarters.
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| Will the gold market will shift to the East? Posted: 04 Aug 2010 01:00 PM PDT China's central bank said in a statement it will allow its banks to import and export more gold as part of a program to push forward the development of the country's market in the precious metal. This is part of the on-going effort to further liberalize the gold market broaden gold's appeal throughout China. China has long been unable to fully explore gold demand. This is another step along that road.
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| Economic Deflation: The Blood on Bernanke's Hands Posted: 04 Aug 2010 11:55 AM PDT We left off yesterday wondering what stock market investors were thinking. They bought stocks heavily on Monday. Then, yesterday, they sold them a bit - the Dow fell 38 points. Yesterday was largely uneventful. Gold rose a dollar. Oil climbed to $82. Maybe stock market investors are not really expecting to get rich. Maybe they're trying to avoid getting poor. They may figure that the real risk is being in cash...not in stocks. If so...they may have a point. Here's the low-down... As near as we can tell, the Japanese-style correction is still underway. Consumers are careful about spending because they fear they might not have jobs. Employers are careful about hiring because they fear they might not have revenue. And banks are careful about lending because 1) few people want to borrow, and 2) the banks figure they may need the money themselves. Meanwhile, Ben Bernanke has staked his entire reputation on being able to avoid a Japanese-style slump. He gave a famous speech about it back on the 21st of November 2002. He called it "Deflation: Making Sure it Doesn't Happen Here." Well, that was when the inflation rate was not far from the Fed's 2% target. What's happened since? The consumer price inflation level - as measured by the government - has now dropped down to 0.5%. And many economists think it will go negative soon. Hmmm... This leaves Mr. Bernanke in a tight spot. It looks like deflation is happening here. And it is happening after Ben Bernanke has already used most of his tricks to stop it. The Fed is lending money at 0.25% interest - effectively zero. What's it going to do next? Pay you to take the money? If Bernanke allows deflation to happen...and persist...he will have Congress on his back. The Fed is supposed to be independent. But every Fed member knows which side his bread is buttered on. And no one doubts where the butter comes from - the US Congress and the administration. And everyone also knows that there will be mid-term elections this year. As it stands, the voters are not too happy. They've seen the banks get bailed out. They've watched Goldman's boys make their millions. And they've begun to wonder whose interests their elected representatives are really serving - the voters who sent them to Washington? Or the special interests who write big campaign checks? (Goldman gave millions to the Obama campaign...one of the best investments it ever made...) Unfortunately for democracy, the poor voter has no idea of what is going on or why. If he has a job and his house is rising in price, he'll likely vote for the clowns already in Washington. If not, he'll want new clowns. And right now, his house is likely to be underwater...and probably sinking. As for his job, he's lucky to have one. Ben Bernanke must surely feel the pressure to "do something," right? Not only that, his reputation is at stake too. What did he say in that remarkable 2002 speech? Oh yes, that "under a paper money system, a determined government can always generate higher spending and hence positive inflation." Well, maybe. But so far, it is looking as though it may not be as easy as the younger Mr. Bernanke thought. We have a paper money system, no doubt about that. We also have a Fed that is determined to keep inflation positive. But we also have inflation that is becoming less positive every day...and may turn negative soon. And more thoughts... Remember our discussion of prices yesterday? Here at The Daily Reckoning, we have nothing against higher prices...and nothing against lower prices. It's dishonest, misleading, and treacherously false prices that we don't like. They send the wrong information. They may tell us that an item is plentiful, for example, when it is actually in short supply. They may cause us to invest our money in the belief that profit margins are increasing when they are actually shrinking. They may also induce us to expand production, when the world already has far too much of what we have to offer. And unfortunately for the market system, we live in a world of phony prices. Nobody knows what anything is really worth... Let's take a simple concept like consumer price levels, generally. According to the feds' calculation they're barely rising at all. But if you computed them the same way the Europeans do, you'd find the US price level moving up at 3.5% per year. So, then you'd have to wonder whether Bernanke and company should be concerned at all. If it's inflation they want, inflation is what they've got. Maybe. We don't know. We can't trust prices...or the calculation of price levels. But the Bernanke team probably has to trust its own numbers. After all, if you can't trust numbers you twisted yourself, what is the world coming to? Besides, whether the inflation rate is 0.5% or 3.5% hardly matters. People don't have jobs. They don't have incomes. They don't have much desire to vote for sitting politicians. And Ben Bernanke is going to lose his reputation - such as it is - if he allows this Japanese-like slump to continue. So, what's he going to do. He has to "do something"...but what? Well, there aren't many choices. About the only thing he has left is "quantitative easing." Yes, maybe stock market investors are right. Maybe they don't really think stock prices are going to rise. Maybe what they're really worried about is that cash will turn out to be a bigger trap that stocks. After all, if there is one thing a central bank ought to be able to do - if it puts its mind to it - is create 'positive' inflation. And it looks as though the Bernanke Fed will go all out to do it. The Fed's Open Market Committee meets next week. Most likely, they're going to threaten to buy more treasury bonds. That's the way they hope to get more dollars in circulation and raise consumer prices - thus encouraging both "positive" inflation and consumer spending. If that doesn't work, they'll have to resort to even more radical solutions - such as dropping money from helicopters. They'll keep at it, most likely, until they get the job done. Whether that will take 6 months or 6 years - we don't know. In the meantime, the sensible investor may figure he'd rather be in, say, Exxon or Intel or Johnson & Johnson rather than in the US dollar. Many of the blue chips are cheap. They will probably get cheaper. But then, once the Bernanke inflation machine begins to get some traction, they will probably be a much better place for you money than cash. Bill Bonner
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| Government Subsidies For Bloggers? Posted: 04 Aug 2010 11:06 AM PDT
From The Daily Capitalist I almost choked when I read Lee Bollinger's op-ed piece in the Wall Street Journal advocating public financial support of the mainstream media. This is the Lee Bollinger who is the president of Columbia University and was recently named Deputy Chair of the New York Federal Reserve Bank. The article says more about the writer and the mainstream media than does its subject matter. It is unbelievable and irresponsible that anyone in his position could seriously advocate subsidies for the press. What Professor Bollinger is saying is that he wants us to pay for news from journalists he thinks we should read, not what we think we should read. As a law professor he is an expert in first amendment issues. If he is an expert then he is the exemplar of the problem with scholarship and intellectualism in America today. He obviously distrusts our ability to make choices about the news we wish to read and he is eager to supplant his judgment for ours. If he believes that forcing us to pay for news services we don't want is the key to Constitutional freedoms and freedom of the press, then we are in trouble because he is in a position to do something about it. He frames the debate in these terms:
Let me translate what he is saying: competition thrives because of new media yet since newspapers and television journalism has failed to innovate and keep up, we must subsidize them because their reporting is (was) better. He cites NPR, PBS, and BBC as the ideals of journalism. The common theme is that these services are all supported by government. Further, he suggests, as an instrument of foreign policy, we need to compete with China's CCTV and Xinhua news, and Qatar's Al Jazeera. If the BBC is the standard, then I urge you to actually listen to it as it drones on about what is happening in the UN or Mali today. Professor Bollinger believes that press freedoms and government support are compatible, not antithetic. If anything in history is so obvious it is the fragility of freedom of the press. Of course this is something Jefferson and Madison fully understood and they thought they nailed down press freedom forever. As we know, the limitations of the Constitution were breached from the very beginning as Federalists sought to centralize power. While Wickard v. Filburn is not the only example, it is one of the most egregious cases that removed the limitations of federal power over almost any commercial activity as the case defined almost anything as "interstate commerce." It is also settled law that what the government pays for, it can regulate. Subsidies would open the gate wide to assaults on press freedoms. When you think about Professor Bollinger's argument, he is turning the Fourth Estate into a public utility, a service deemed good for society that we must subsidize, direct to hire more reporters for foreign bureaus, and be "fair" in its reporting as must broadcast media. This is a phony argument and is a direct assault on freedom of the press. As one wag said in the Journal article's commentary page, "Article translation: 'We have to give tax money to CBS to help fight Rush Limbaugh and Fox News.'" And most bloggers. And if you don't think that is the case, then you better stop reading now. He proves that the government is out to get the media it doesn't like. He says:
If you want to see the integrity of the "mainstream media," then I urge you to read this post by Cato's Jim Powell ("Bailouts for Journalists?"). He details the fawning reporting of Progressives, especially from the NY Times, over folks like Mussolini, Stalin, Mao, and Castro. Why would we expect a subsidized press to be any better? Professor Bollinger is like an artifact left over from the New Deal when centralization of federal control over all aspects of the economy was in vogue (as in the National Recovery Act). He actually seems to despise press freedoms by advocating subsidies for mainstream media which is truly a slippery slope to government regulation. He distrusts market competition and he distrusts you and your ability to make choices about what information you wish to receive. He is a dangerous man. I think I serve a valuable service by giving my readers a fresh, innovative view of the economy. Don't I deserve a subsidy, Professor Bollinger? Who is so wise as to know what is good for all of us?
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| A World of Phony Prices and Twisted Numbers Posted: 04 Aug 2010 11:00 AM PDT Remember our discussion of prices yesterday? Here at The Daily Reckoning, we have nothing against higher prices…and nothing against lower prices. It's dishonest, misleading, and treacherously false prices that we don't like. They send the wrong information. They may tell us that an item is plentiful, for example, when it is actually in short supply. They may cause us to invest our money in the belief that profit margins are increasing when they are actually shrinking. They may also induce us to expand production, when the world already has far too much of what we have to offer. And unfortunately for the market system, we live in a world of phony prices. Nobody knows what anything is really worth… Let's take a simple concept like consumer price levels, generally. According to the feds' calculation they're barely rising at all. But if you computed them the same way the Europeans do, you'd find the US price level moving up at 3.5% per year. So, then you'd have to wonder whether Bernanke and company should be concerned at all. If it's inflation they want, inflation is what they've got. Maybe. We don't know. We can't trust prices…or the calculation of price levels. But the Bernanke team probably has to trust its own numbers. After all, if you can't trust numbers you twisted yourself, what is the world coming to? Besides, whether the inflation rate is 0.5% or 3.5% hardly matters. People don't have jobs. They don't have incomes. They don't have much desire to vote for sitting politicians. And Ben Bernanke is going to lose his reputation – such as it is – if he allows this Japanese-like slump to continue. So, what's he going to do. He has to "do something"…but what? Well, there aren't many choices. About the only thing he has left is "quantitative easing." Yes, maybe stock market investors are right. Maybe they don't really think stock prices are going to rise. Maybe what they're really worried about is that cash will turn out to be a bigger trap that stocks. After all, if there is one thing a central bank ought to be able to do – if it puts its mind to it – is create 'positive' inflation. And it looks as though the Bernanke Fed will go all out to do it. The Fed's Open Market Committee meets next week. Most likely, they're going to threaten to buy more treasury bonds. That's the way they hope to get more dollars in circulation and raise consumer prices – thus encouraging both "positive" inflation and consumer spending. If that doesn't work, they'll have to resort to even more radical solutions – such as dropping money from helicopters. They'll keep at it, most likely, until they get the job done. Whether that will take 6 months or 6 years – we don't know. In the meantime, the sensible investor may figure he'd rather be in, say, Exxon or Intel or Johnson & Johnson rather than in the US dollar. Many of the blue chips are cheap. They will probably get cheaper. But then, once the Bernanke inflation machine begins to get some traction, they will probably be a much better place for you money than cash. Bill Bonner A World of Phony Prices and Twisted Numbers originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| 11 Reasons Why The Federal Reserve Is Bad Posted: 04 Aug 2010 10:39 AM PDT 
Those are some very important questions. Hopefully what you are about to read will open the eyes of many. The truth is that our financial system is centrally-controlled and centrally-managed by a group of banking oligarchs who have constructed an ever-expanding debt spiral which has been efficiently designed to slowly transfer all wealth into their hands. The following are 11 reasons why the Federal Reserve is not good for the United States.... 1 - The Federal Reserve was created as a way to enslave the U.S. government with debt. The truth is that the U.S. government only goes into debt if it chooses to. Theoretically, one day that U.S. government could simply decide to print as many U.S. dollars as it wants and pay off all government debts. But under the current system that is not allowed. You see, today the U.S. government does not issue any money. The Federal Reserve issues all money. That is why they are called "Federal Reserve notes". Under the current regime, whenever the U.S. government wants more currency to be created it has to go into more debt. In a previous article entitled "It Is Now Mathematically Impossible To Pay Off The U.S. National Debt" I explained how this insidious system works.... If you will pull a dollar bill out and take a look at it, you will notice that it says "Federal Reserve Note" at the top. It belongs to the Federal Reserve. The U.S. government cannot simply go out and create new money whenever it wants under our current system. Instead, it must get it from the Federal Reserve. So, when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes. The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days). So that is how the U.S. government gets more green pieces of paper called "U.S. dollars" to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on. So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger. Now, apologists for the Federal Reserve system are quick to point out that the Federal Reserve does not make much of a profit. Once a "statutory dividend" of 6% is paid to member banks and a capital account surplus is "maintained", the rest of the profits of the Federal Reserve go back to the U.S. Treasury. Problem solved, right? Wrong. The point is not how much of a profit the Federal Reserve makes or does not make. The point is that the Federal Reserve is a tool for creating U.S. government debt which slowly drains our national wealth and which ends up greatly enriching the global elite. As of July 1st, the U.S. government had spent $355 billion so far in 2010 on interest payments to the holders of the national debt. Have you ever wondered who gets all that money? The truth is that the wealthiest individuals around the globe have been getting very rich for a very long time off of government debt. 2 - The Federal Reserve creates money out of this air. In a previous article, I noted how this fact comes out in congressional hearings and yet the American people just don't seem to get too upset about it.... During a recent Joint Economic Committee hearing on Capital Hill, U.S. Representative Ron Paul directly confronted Federal Reserve Chairman Ben Bernanke about this 1.3 trillion dollars. As Ron Paul described how this 1.3 trillion was just created out of thin air, all Bernanke could do was nod his head. Why? Because it was the truth. 3- The huge predator megabanks that now dominate the U.S. banking system use the Federal Reserve as a tool to make money. One of the ways they do this is called the U.S. Treasury carry trade. What happens is that the Federal Reserve lends huge amounts of money to the megabanks for next to nothing, and then these megabanks use all that cash to buy U.S. government debt. This little "trick" helped enable four of the biggest U.S. banks (Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup) to have a "perfect quarter" with zero days of trading losses during the first quarter of 2010. Wouldn't you like to have a perfect batting average? 4 - The Federal Reserve devalues our currency. Since the Federal Reserve was created in 1913, the U.S. dollar has lost 96 percent of its purchasing power. The truth is that just a two percent inflation rate will wipe out half of your purchasing power within a single generation. In the chart below, you can clearly see that the beginning of the rapid rise of inflation in the United States coincided with the creation of the Federal Reserve....
5 - The Federal Reserve manipulates the U.S. economy by setting national interest rates. By keeping rates high or low, the Federal Reserve has the power to create economic growth or to destroy it. The have the power to inflate massive bubbles and to pop them. Most Americans give way too much credit and blame to presidents like Bush or Obama for how the economy is doing. The truth is that they really don't have that much control over the economy compared to the Federal Reserve. 6 - The Federal Reserve also controls the national money supply. They can pump trillions into the economy or pull trillions out without being accountable to anyone. This can have disastrous consequences. For example, after the U.S. stock market crash of 1929, the Federal Reserve continued to contract the money supply. Many analysts believe that this was one of the key things that precipitated the Great Depression. 7- The Federal Reserve is not part of the U.S. government. The truth is that the Federal Reserve is about as "federal" as Federal Express is. In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was "not an agency" of the U.S. government and therefore it was not subject to the Freedom of Information Act. It is kind of funny how Fed officials are always talking about how important their "independence" is, but whenever anyone starts criticizing them for being private they start stressing their ties with the government. 8 - The Federal Reserve has become far, far too powerful. The reality is that those running the Federal Reserve are not elected and yet have an enormous amount of control. In fact, Ron Paul recently told MSNBC that he believes that the Federal Reserve is more powerful than Congress..... "The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don't even have any transparency of this. They're more powerful than the Congress." 9- The Federal Reserve is dominated by Wall Street and the New York banks. The New York representative is the only permanent member of the Federal Open Market Committee, while other regional banks rotate in 2 and 3 year intervals. The former head of the New York Fed, Timothy Geithner, is now U.S. Treasury Secretary. The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks. 10- Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements for banks. Fractional reserve banking has always been a way that the bankers have conned the public, but now Bernanke wants to get rid of the pretense of "reserves" altogether. It is almost too bizarre to believe, but it is right there in black and white on the Federal Reserve's own website.... The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system. 11 - The Federal Reserve is not accountable to anyone. The Federal Reserve has never undergone a true comprehensive audit since it was created back in 1913. Ron Paul's proposal to audit the Federal Reserve, which had previously been co-sponsored by 320 members of the U.S. House of Representatives, ultimately failed by a vote of 229-198. But shouldn't the American people be able to see what is going on inside the Federal Reserve? Shouldn't we have some way to keep them accountable? After all, they have an incredible amount of power over us, shouldn't we have at least a little bit of power over them? Unfortunately, the truth is that they desperately do not want light to be shined on the elaborate "shell game" that they are running. Have you ever wondered if it was just a coincidence that the personal income tax was implemented just about the same time that the Federal Reserve was created? Why does the U.S. government have to tax us? Why can't the U.S. government just print up all the money that it needs? Well, the way that our Congress spends money that would probably create horrific hyperinflation, but that is the subject for another article. The point is that the U.S. government should not have to get U.S. dollars from someone else. If you take a few minutes to stop and think about it, an America where there is no Federal Reserve, no personal income tax and no IRS is not that hard to imagine. If the U.S. government functioned just fine without all of them at one time, then why couldn't the U.S. government function just fine without all of them now? The system we have now clearly is not working. The Federal Reserve was supposed to guarantee that our financial system would be perfectly stable, but in reality our financial system has become much more unstable. It is time for different thinking. It is time for the U.S. government to take back control of our currency and of our economy. It is time to start electing some people with common sense to represent us in Washington. So what do you think of the Federal Reserve? Feel free to leave a comment with your opinion....
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