Gold World News Flash

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• Assorted Charts From Trader Dan
• Manipulating the Silver Market
• Bear Market Race Week 149: The Banking System’s Bond Buying Binge
• Nelson Hultberg on Libertarian-Conservatism
• In The News Today
• Editor's Note: Buy Gold!
• Portions of the Gulf are So Toxic that Dolphins, Fish, Crabs, Stingrays and Other Animals are "Trying to Crawl Out of the Water"
• This Economy Is Ripping The Dignity Of Millions Of Unemployed Americans To Shreds
• ConocoPhillips Finds Better Opportunity in Australia Than in Russia
• Are Gold & SP500 Topping Out Here?
• Eureka moment for stubborn Yukon prospector who wouldn’t give up
• Meanwhile, the gold market riggers don’t even get their hands dirty
• Gene Arensberg: Large commercials not aggressively short gold yet
• Bullion As An Alternative To Shorting, Part II
• German Financial Watchdog Says Gold Is Not Money
• The Split Personalities of Platinum and Palladium ETFs
• Gold to make new highs as we trend into 2011 – Foster
• Australia Wins
• GLD – Gold ETF Daily Chart
• Israel Knesset Member Declares "We Are Preparing For War"
• Eureka moment for stubborn Yukon prospector who wouldn't give up
• Eureka moment for stubborn Yukon prospector who wouldn't give up
• Ron Paul: Washington Is Destined to Destroy the Dollar
• Deutschland Uber Alles Grasshoppers
• China Ditches US Currency - Are Times Changing?
• Meanwhile, the gold market riggers don't even get their hands dirty
• Meanwhile, the gold market riggers don't even get their hands dirty
• James Turk: Manipulating the silver market
• On the Importance of Vacation
• Ex-Fed Governor Mishkin Caught in 'Pay for Say' Over Icelandic Economy
• Investor Sentiment: Heading In The Right Direction
• Shale Gas E&P Players: Challenges Appear to be Nearing an End
• At £4.8 Trillion In Total Debt Including Unfunded Liabilities, UK Debt Is Six Times More Than The Official Number
• Focus on Investing Basics in a Choppy Market
• The Complete Q2 Hedge Fund Holdings Update (In Which We Discover That 181 HFs Hold Apple Stock)

Assorted Charts From Trader Dan Posted: 22 Aug 2010 06:50 PM PDT View the original post at jsmineset.com... August 22, 2010 04:00 PM Dear CIGAs,   Click here for this week's action in the Gold/Bonds Ratio, US Bonds, Dow Jones/Gold Ratio, Continuous Commodity Index, Comex Gold, HUI/Gold Ratio, and the HUI Monthly, all with commentary from Trader Dan Norcini…...

Manipulating the Silver Market Posted: 22 Aug 2010 06:49 PM PDT www.fgmr.com August 22 2010 – If someone were manipulating the silver market, you would see exactly what has actually occurred in silver over the past several days. To manipulate the price you would use your buying power and accumulate long positions until you force silver above resistance in the high $18.40s and thereby trigger all the buy-stops sitting there, including the one we placed. You would then sell your long positions into those buy-stops and keep selling until (1) you became short and (2) your selling drove prices lower. I have just described exactly what has just taken place in silver. What we have seen is a classic textbook case of market manipulation. We have seen it so many times before in recent years, it is the reason I warned on 18 August: “Let’s see if silver can hold this level, particularly with option expiry coming soon.” I expect that we will see the rest of this repetitive pattern of manipulation play ou...

Bear Market Race Week 149: The Banking System’s Bond Buying Binge Posted: 22 Aug 2010 06:49 PM PDT The 1929 & 2007 Bear Market Race to The Bottom Week 149 of 149 Gold and Silver’s A-D Lines and Step Sums The DJIA & the NYSE’s A-D Ratio Money Market Funds Down 28% The Federal Reserves’ Balance Sheet The Banking System’s Bond Buying Binge Mark J. Lundeen [EMAIL="mlundeen2@Comcast.net"]mlundeen2@Comcast.net[/EMAIL] 20 Aug 2010 Color Key to text below Boiler Plate in Blue Grey New Weekly Commentary in Black Below is my BEV chart for the Bear Race. The Great-Depression Dow Jones Industrials’ Bear Market ended 149 Weeks after its September 1929 Highs, and here we are: Wk 149. It was brutal, but it was now over. But the scars this -89% Bear Market left on the minds of Investors would linger for decades. The Barron’s 11 July 1932 Issue covered the exact bottom of this Bear Market, although no one at Barron’s or their Readers knew it at the time. And when it was hot off the press, no Reader of...

Nelson Hultberg on Libertarian-Conservatism Posted: 22 Aug 2010 06:49 PM PDT ... and His New Conservative American Political Party Sunday, August 22, 2010 – with Ron Holland Nelson Hultberg The Daily Bell is pleased to present an exclusive interview with Nelson Hultberg (left). Introduction: Mr. Hultberg is a freelance writer in Dallas, Texas and the Executive Director of Americans for a Free Republic. His articles have appeared in such publications as The Dallas Morning News, the San Antonio Express-News, The American Conservative, Insight, The Freeman, and Liberty, as well as numerous Internet sites. He is the author of Why We Must Abolish The Income Tax And The IRS (1997) and has just written a new book titled, The Conservative Revolution: Why We Must Form a Third Political Party to Win It. In addition, he has a major work on political philosophy, The Golden Mean: The Case for Libertarian Politics and Conservative Values, that is to be released in this coming year. Daily Bell: There's a lot we want to discuss, so thank...

In The News Today Posted: 22 Aug 2010 06:49 PM PDT View the original post at jsmineset.com... August 22, 2010 09:34 AM Jim Sinclair’s Commentary This is from the Dean of Gold, Harry Schultz. I am proud to say I am a lifetime member of HSL. Harry is the Dean. Enough said. Please read. Jim, This is a watershed article from WSJ. Good R&D, in my opinion. It clarifies and codifies what we already know and narrows the parameters, saves us time and worries about less vital aspects. Harry Rethinking Gold: What if It Isn’t a Commodity After All By JEFF OPDYKE AUGUST 21, 2010 This won’t sit well with some people: Gold isn’t a commodity. There. I’ve said it. But before you fire off an angry response, hear me out. The facts might change your view of gold’s role in a portfolio. For a long time, we’ve all heard that gold is a commodity—no different, really, from silver or wheat or pork bellies. Its price ebbs and flows (supposedly) with inflation, which historically drives commodity pri...

Editor's Note: Buy Gold! Posted: 22 Aug 2010 06:49 PM PDT This is something I posted as a note to my friends on facebook. I thought I'd share it here as well: The US government is bankrupt. It cannot pay off its obligations. It is mathematically impossible at this point. Maybe 10 years ago it was still possible, but after Bush and Obama's insane spending, it is simply not feasible... So what happens when you cannot pay your debts? If you were a person or a company you would file for bankruptcy protection and have a judge determine what you are able to pay back. Your credit would be impaired and you'd have a hell of a time borrowing anymore money since you are not worthy. And for good reason. Going bankrupt is a sign of bad management. When a country goes bankrupt... it has 2 options. It can either refuse to pay back what it owes or it can print money to pay for its obligations. Lets consider the 2 in context of what is happening in the US. The first option (refusing to pay its debts) is politically unfeasible. In the case tha...

Portions of the Gulf are So Toxic that Dolphins, Fish, Crabs, Stingrays and Other Animals are "Trying to Crawl Out of the Water" Posted: 22 Aug 2010 05:48 PM PDT → Washington’s Blog On Friday, Inter Press Service reported: Danny Ross, a commercial fisherman from Biloxi… said he has watched horseshoe crabs trying to crawl out of the water, and other marine life like stingrays and flounder trying to escape the water as well. He believes this is because the water is hypoxic. …   David Wallis, another fisherman from Biloxi… [said] “I’ve seen crabs crawling out of the water in the middle of the day. This is going to be affecting us far into the future.” This has been a common occurrence since BP started spilling oil into the Gulf. The Post Chronicle noted on August 12th: Some local fishermen say they are seeing strange behavior by marine life -- mullets, crabs and other creatures which normally stay well under water have been sighted congregating on the surface -- and they relate this to the spill. *** "It looks like all of the sea life is trying to get out of the water," said Alabama fisherman Stan Fournier. "In the 40 years I have been on these waters I've never seen anything like this before." The Advocate-Messenger pointed out on July 31st: Besides potentially maintaining higher levels of toxicity, the oil trapped in the water column is also suffocating the ocean, causing radical drops in oxygen levels never before seen, [Monty Graham, a biological oceanographer specializing in plankton at the Dauphin Island Sea Lab on the coast of Alabama] said.   Following the oil and methane spill, Graham’s measurements of oxygen levels in the waters where he studies plankton dropped to two to three times lower than normal, to a level so low most animals cannot tolerate it.   That suffocating effect is why all kinds of sea animals have been showing up in greater and greater numbers, closer and closer to shore — they can’t breathe in their normal habitats anymore. And AP wrote in June: Dolphins and sharks are showing up in surprisingly shallow water just off the Florida coast. Mullets, crabs, rays and small fish congregate by the thousands off an Alabama pier. Birds covered in oil are crawling deep into marshes, never to be seen again.   Marine scientists studying the effects of the BP disaster are seeing some strange — and troubling — phenomena.   Fish and other wildlife are fleeing the oil out in the Gulf and clustering in cleaner waters along the coast. But that is not the hopeful sign it might appear to be, researchers say.   The animals' presence close to shore means their usual habitat is badly polluted, and the crowding could result in mass die-offs as fish run out of oxygen. Also, the animals could easily get devoured by predators.   "A parallel would be: Why are the wildlife running to the edge of a forest on fire? There will be a lot of fish, sharks, turtles trying to get out of this water they detect is not suitable," said Larry Crowder, a Duke University marine biologist. Tragically, when sea animals crowd into shallow water in an attempt to escape pollution, they can quickly use up all available oxygen. As the New Jersey Department of Environmental Protection writes: The warmer water is the less dissolved oxygen it is able to hold. If the fish schooled very tightly in shallows very close to shore for any reason, they may have simply used up all the oxygen that was available to them and died.”

This Economy Is Ripping The Dignity Of Millions Of Unemployed Americans To Shreds Posted: 22 Aug 2010 05:14 PM PDT If you can still put a roof over your head and food on the table for your family, you should consider yourself to be very fortunate.  There are millions of Americans out there right now that are really, really suffering.  The cold, hard reality of it is that there aren't even close to enough jobs out there for everyone right now.  It is almost as if we are all caught in a really bizarre game of musical chairs where the losers get stripped of their tickets to the middle class.  What this horrible economy is doing to the dignity of millions of middle class Americans is incredibly saddening.  There are a lot of very highly educated and very hard working Americans who cannot seem to get jobs no matter what they do and now find themselves doing whatever they can just to survive.  It can be really hard to keep your dignity when you played by all the rules and you worked as hard as you could all your life and now you find yourself a half step away from being homeless.  Those of us who are still doing okay should never look down on those who are struggling in this economy, because the truth is that any of us could be next.    If you really want to read some horror stories about what long-term unemployment is doing to some people in America, you should go spend an hour or two over at Unemployed-Friends some time.  It is a great forum with a lot of great resources for the unemployed, but it also contains dozens and dozens and dozens of heartbreaking stories from middle class Americans who have had their lives shattered by this economic downturn.       The following is a typical story on Unemployed-Friends.  It is from a 48 year old Air Force veteran who has lost everything and is now sleeping in his vehicle.  It turns out that Scott48's job was shipped off to India and now he has been out of work for over two years.... "I am a 48 year old USAF Vet. I got my house in 1996 with the help of the VA. In 2009 the company I worked for went out of buisness(gone to India) I then became a 99er. I notified Wells Fargo that I lost my job and they said they would work with me, the next mortgage statement I got they conveniently increased my mortgage! With what I got from UE was enough for the house but I had to cut out the luxury of food, gas, utillities, insurance, entertainment and alcohol. That was it for me, so the forecloser ball was in motion. I had to give my dog to my cousin so he would get fed, I took everything I owened to the auction( execpt tools, clothes, pictures, tech manuals and my Saxophone) and sold it. I went to a half-way house the VA recomended for a week and it was joke, so my cousin said I could stay with her. After 4 months she diecided that I wasnt looking hard enough and kicked me out, and Ive applied for everything except selling myself. This summer I was staying in an abandoned house due to forecloser and the real estate company has now put it on the market, and I am now on the street sleeping in my vehicle or a friend here and there. Keeping clean is going to be a challenge cuz the Flying J truck stops charge $10 for a shower, rip-off. What a country!" The truth is that this economy is driving many Americans to the brink of desperation.  Even recent college graduates are becoming desperate enough to actually consider suicide.  The following story is from an Unemployed-Friends user known as 08pacollegegrad.... "I could just take any job like working at fast food places, but I hear people who try can't even get hired there. I went to Wendy's for lunch the other day and I thought of picking up an application...but the slot where they keep the applications was completely empty. That should say it all. Plus, I feel like if I take just any job...I will be set back further and never be able to gain experience in my chosen fields. I follow up on job applications, but employers ignore me for the most part when I try to contact them. I sent five follow up e-mails last week and got no responses. I contacted an employer expressing my interest in working for them, but all they gave me is the link to their online application system that I have never gotten a job from. I am thinking of applying for more internships (I have already done two), but I don't want employers to think why I am applying for an internship when I should have had a full fledged job by now. I have almost killed myself over my situaion and am taking anti-depressants right now. I see a psychiatrist every 4-6 weeks, but I still have days where I feel so empty. I am sick of sitting at home searching for jobs and praying for a response that never comes." Many Americans spend day after day after day looking for a job that never comes.  The sense of hopelessness that can build after doing this for a few years is almost indescribable.  The following is another incredibly sad story from an Unemployed-Friends user known as feuxdejoie.... "I lost my job in June 2008, my husband was working but sentenced to prison for 4 years, for DUI, no accidents or injuries. I had been using my unemployment to pay bills but my last check came June 12, 2010. I'm alone and scared. The city that I live in has the highest unemployment in the State, Illinois. Our children are grown and I sit alone all day searching for jobs. My husband can only call once a month because of the outrageous rates for telephone calls. I'm at the end of my rope and don't know where to turn if they don't pass a tier V for unemployment or open up some jobs. I turned 50 in April and had worked all of my life, starting at age 14 with a work permit! My employer stated to me that they needed someone bilingual and terminated me even after I told them that I would take classes to learn.  I signed up for college and began classes in January then unemployment told me that I wasn't elgible for unemployment while attending school." There are millions of Americans who believe that their lives are over because they can't get decent jobs.  When you lose your job, your home, your car, your health insurance and then finally your unemployment insurance runs out, it is easy to lose all hope as an Unemployed-Friends user named Ember has done.... "so i feel pretty much hopeless. been unemployed since July 2008. in over two years i haven't even been called for an interview. tired of looking and applying for jobs outside of my field that require experience i don't have. it's all for naught. i have two bachelor of science degrees. my BS degrees, cuz that's what they're worth. since losing my job i've gotten divorced. lost my house. lost my health insurance. totalled my car and sustained chronic back pain. and moved in with my mom. and did i mention, when all this started i was a new mom, just back from maternity leave? so (now) i'm raising a toddler on my own, with no income. my unemployment insurance ran out a few weeks ago. i don't even know what to do now. i just want to disappear. i'm tired of trying. i'm tired of being a burden on everyone. if i didn't have the responsibility to take care of my child i wouldn't be around anymore." This final example is from an Unemployed-Friends user identified as Faith1028.  Be warned that this one will shake you to your core if you have any sensitivity at all.  As you read this, keep in mind that this kind of thing is literally happening to millions of Americans these days....  "HI, y'all! This is my story. I'm from Chicago. I lost my job 11.06.09 - I did my best to remain positive & confident that I would get a job by the end of November. December 2009 - Still no job. I'm getting food stamps (LINK card) & Unemployment Benefits. Not much money at all, but I'm surviving. Thanks to all this stress, my stomach has been burning and/or been painful daily for all December. I puked my guts out on the 26th. January 2010 - My stomach is still hurting every day. I had to close out my savings account. I haven't told my slumlord or my fellow tenants that I lost my job; I go on pretending I'm still going to work everyday. Unfortunately on the 26th, I got my eviction notice. I called the office to ask why. The response was "I don't know." I became hysterical. I've no job, no money, no family/friends to help. (I have many *relatives*, but no *family*.) I truly believed my only alternative was suicide. I wanted to say good-bye to my brother (my only sibling), but we haven't spoken to each other for over 4 years; I no longer have his address/phone number. I found him on Facebook. I didn't bring up my situation because I felt he wouldn't care. We exchanged a few messages and that was it. I haven't heard from him since. Good riddance. February 2010 - Someone found a family that I can stay with for only $250/month! My own room! They turned out to be aquaintances of mine. Vegetarian, too! At least I have a place to stay. I'd rather live alone, but, hey, I'm desperate! -- And I'm not too crazy about the bedbugs. OW! June/July 2010 - Thanks to daily/nightly use of citrine crystals since 30 May, I have no more stomach problems! Thanks to weekly use of a natural (green!) pesticide from PlusNaturalEnzymes.com, I no longer have a problem with bedbugs! However... Mid-June, my Unemployment Benefits ran out. Of course, I'm still looking for a job! What am I supposed to do - put a gun to someone's head and force them to hire me? As of this date, I have $12 left to my name; $0 in my chequeing account. I recently reapplied for and am now receiving food stamps. Before I got my food stamps back, I've eaten whatever (Vegetarian!) food I can get, even stuff I'm allergic to. As a result, I've become sick: cold-like symptoms, pain in lower intestines...and a rash over my arms, legs, & neck. Oh, does it itch! At least my food allergies are not life-threatening. Needless to say, my depression has gotten worse. I am really trying hard to remain positive -- and alive. But why? Is it really all worth it? I haven't paid July's rent, and the people I'm staying with are getting very *impatient*; I fear I'll be evicted again! The money is coming! It's not my bloody fault! Someone on Twitter sent me a link to this site. I know I'm not the only one suffering; some folks have already committed suicide. I don't want to die, but I don't want to be homeless, either. I am so bloody scared. Just give me money that my tax dollars paid for! --Or better yet: GIVE ME A BLASTED JOB!!" The really sad thing is that there are countless other stories just like these being posted all over the Internet all the time. People are hurting. People are losing hope. So how did we get here? Well, it turns out that the "haves" have figured out that they really don't need the "have nots" after all.  Incredible advances in technology have increasingly enabled employers to replace humans with machines and computers.  In addition, as we have detailed previously, millions upon millions of middle class American jobs are being shipped off to China and to dozens of third world nations where workers are more than happy to work for less than a tenth of what an American worker would make. All of those jobs that have been lost to technology and that have been sent overseas are not going to come back.  The hordes of long-term unemployed that we are seeing now is just the beginning.  It is going to get a lot worse. So the next time you hear a hard luck story from an unemployed American, don't look down on that person. You might be next.

ConocoPhillips Finds Better Opportunity in Australia Than in Russia Posted: 22 Aug 2010 05:11 PM PDT Kurt Wulff (McDep Associates) submits: Buy-recommended ConocoPhillips (COP) offers unlevered appreciation potential of 47% to a McDep Ratio of 1.0 where stock price would equal Net Present Value (NPV) of $95 a share. In second quarter results released today, downstream refining and marketing operations were much improved. Declaring an intention four months ago to sell half of a 20% stake in Lukoil (LUKOY.PK), also a McDep buy recommendation, Chief Executive Jim Mulva now expects to sell all of it. About 1% has already been sold, a block of 8% is under agreement to be sold to Lukoil and the remainder would be sold by the end of 2011. NPV is unchanged as we take Lukoil out of our earnings and cash flow projections and presume that the proceeds from Lukoil stock are used to repurchase COP shares and reduce COP debt. While opportunities in Russia have been slow to develop, Australia is booming. The company has further validated its Poseidon discovery that may supply a potential expansion of the liquefied natural gas plant at Darwin in the Northern Territory of Australia. In the state of Queensland in northeast Australia, COP has proposed a coal seam gas to LNG project. That idea would have died had killer taxes been implemented by the federal government headed by Prime Minister Kevin Rudd. His successor, Ms. Julia Gillard, promises to be more reasonable. Meanwhile, investors seem to like COP’s new emphasis on bringing out value as the stock trades above its 200-day average. Complete Story »

Are Gold & SP500 Topping Out Here? Posted: 22 Aug 2010 05:04 PM PDT By Chris Vermeulen, TheGoldAndOilGuy Prices continue to churn as traders and investors try to figure if they want their hard earned dollar in cash or investments. The market is very jittery simply because no one wants to get caught on the wrong side of the market if it makes another 30-40% move, which is why we are seeing money rotate in and out each with very little commitment and follow through. Until a major trend looks to be in place most investors will not me holding many positions over night or through the weekend. Here are a couple charts on what I think is most likely to happen in gold and the sp500. GLD – Gold ETF Daily Chart Last week we saw gold move higher by 1% but I cannot help but think a sharp sell off is only days away from being triggered. Either we get a another pop into resistance which would eventually trigger a wave of sellers and cause a sharp drop or the price of gold will drift lower to eventually break a key support level and trigger stop orders. Once the stops start to get triggered I would expect follow through selling for a couple days which will pull the price of GLD back down to the $113-116 area. Also there is a possible head and shoulders pattern forming on this chart which is not picture perfect one but, it's important to be aware as a neckline break could trigger massive selling and pull GLD down to the $100 area. But that would not unfold for several weeks if not months. SPY – SP500 ETF SP500 broke down from the support trendline two week ago and has since been trying to bounce. Last week we did see a two day pop but was given back Thursday. As you can see there is a possible mini head & shoulders pattern forming and the current price is testing the neckline. A breakdown below this should trigger a move to the $102 level. Weekend Trading Conclusion: In short, the market is trading at a key support level and this week should be exciting. Looking at several large cap stocks I am seeing bear flags on a large percentage of charts. Seeing these forming makes me think lower prices are just around the corner. It looks like low risk trading setups are about to start popping up across the board and if we get a powerful trend going into the year end there will be some good money made for those on the proper side. Receive My Free Weekly Trend Trading Reports and Market Updates at: www.TheGoldAndOilGuy.com Chris Vermeulen

Eureka moment for stubborn Yukon prospector who wouldn’t give up Posted: 22 Aug 2010 05:01 PM PDT By Brenda Bouw The Globe and Mail, Toronto Tuesday, August 16, 2010 http://www.theglobeandmail.com/report-on-business/industry-news/energy-a… Gold fever is gripping Yukon for the first time in more than a century following a discovery by a penniless and persistent prospector who was determined to find the source of the original Klondike deposits. Shawn Ryan lived in a tin shack for years before uncovering the so-called White Gold district, not far from the fabled Klondike zones. While his work has yet to result in an operating mine, it has already sparked a record-setting staking rush and led to the multimillion-dollar takeover of a junior gold explorer by a senior producer. More deals are expected as junior mining companies flock to the area around Mr. Ryan's findings and raise millions to finance further exploration, making big bets on what they hope will be the next mother lode of gold. Michael Wark, executive director of the Yukon Chamber of Mines, said Mr. Ryan may in fact have discovered a source of the Klondike gold from the late 1800s, but "regardless, they have a significant gold discovery there." For Mr. Ryan, the discovery in the area south of Dawson City, near where the White and Yukon rivers meet, is the reward for the years spent hunting for gold in the heart of one of the world's most storied mining districts. The area was made famous by the Klondike gold rush of 1896, but has received only sporadic attention since. In recent years, other companies came close to making the same discovery as Mr. Ryan, but walked away after running out of money or deciding other opportunities looked better. Mr. Ryan hung in. He and his wife, Cathy Wood, and eventually two children, pinched pennies for years, surviving mostly on an annual $10,000 exploration grant from the Yukon government. Living on the outskirts of Dawson City, they paid $250 a month to rent a 365-square-foot tin shack that had served as the local barbershop at the turn of the previous century. In 2004, after about eight years of hunching over maps and sampling soil, Mr. Ryan finally found the first signs of what he had been digging for so deeply, when assay results indicated geochemical markers associated with gold. It took a few years for others to take notice, but now that they have, other exploration firms are flooding into the area, bringing with them a much-needed boost for local businesses ranging from hotels to helicopter companies. The number of mining claims in Yukon surged to just under 110,000 in the first seven months of this year, about 38 per cent more than all of 2009, which itself was a record year with just under 80,000 claims. Prospectors obtain claim tags from the mining recorder, a unit of the territorial government, then stake their claims on Crown land, in the traditional manner by using posts to mark out a rectangle no bigger than 1,500 feet on each side. Each claim costs $10 and prospectors have to do at least $100 of work a year on each claim (or pay $100) to maintain their rights to the land. The staking rush has turned Mr. Ryan into a hometown hero. "He's a gem for Dawson," said Josee Savard, who has been operating Klondike Kate's Restaurant & Cabins with her husband in the town for the past two decades. Mr. Ryan's story is a rags-to-riches tale of a miner's son from Timmins, Ont., who moved west as a young man for a job in the bush picking morel mushrooms. He met his future wife at work. It was when she was seven months pregnant that the two decided they needed to find a new way to make a living. Mr. Ryan, who had done some geological work for his dad's company when he was younger and wanted to go on working outdoors, decided to become a prospector. Today the self-taught geologist has become one of the rare prospectors to hit the jackpot. He has made millions through the share options and cash that he has received, and will become even richer if one of the properties he has uncovered turns into an operating gold mine and he begins collecting royalties on the output. Mr. Ryan and his wife now run Ryanwood Exploration Inc., a geology consultant that has expanded to more than 50 employees. "There haven't been too many prospectors who found a discovery that opened up a mine. That will be neat if that happens," Mr. Ryan, 47, said in a recent interview from his home in Dawson City, which he describes as an upgraded 900-square-foot shack. The secret behind his fairy-tale success? Science, persistence, and a lot of patience. Mr. Ryan believed that the source of the Klondike gold rush was out there, somewhere. He did his homework, and discovered that the White Gold region had unique soil that provided good clues as to what might lie beneath the surface. Navigating by those clues, he dug deeper than most prospectors had in the past. Then he stuck with it, for years. "It's just perseverance. A prospector has to believe there is something out there. Now it's just coming true. I can tell people, 'See, I told you so.' I always believed in it," said Mr. Ryan, who is moving to Whitehorse in the coming weeks with his wife and two children, now 12 and 14. "I kind of feel like the Clampetts on the way to Whitehorse and into a bigger house," Mr. Ryan joked. The family also went on their first vacation this summer, a two-week trip to Europe. While Mr. Ryan has become the latest poster boy for prospectors, his road to riches was long and rocky. The first option agreement he signed with a junior mining company around 2004 fell through after less that two years, when the company decided it wanted to pursue oil and gas exploration instead. Mr. Ryan continued working the property and brought the data to a mining conference in Toronto in 2007. It was there that his work began to attract attention. One startup company, Underworld Resources, was particularly eager to get its hand on the property. "Even though it was an early-stage property" — never been drilled before — "it had all of the geological and geochemical indicators that I look for in a property," Rob McLeod, founder of Underworld and now head of exploration at Full Metal Minerals, said in a recent e-mail to The Globe and Mail. "We knew that there were other junior and possibly major companies that also wanted to option the property from Shawn, so we offered a very generous deal, including a lot of Underworld shares and a good royalty. Fortunately we had the best bid, and the rest is history. Some said we paid too much at the time." Underworld hit gold on only its fourth drill hole, an amazingly fast result in the mining business. The grade proved to be higher than expected and, as more drilling led to more positive results, the discovery caught the attention of Kinross Gold Corp., a Toronto-based producer. Last summer Kinross bought an 11-percent stake in Underworld and then took over the entire company nine months later for about $138 million, a 50-percent premium to Underworld's average trading price before the acquisition. "That made it real … it validates the discovery," said Michael Gray, an analyst at Macquarie Securities. It also resulted in Mr. Ryan being named Prospector of the Year by the British Columbia mineral exploration industry. "Shawn is the most talented prospector I've met in my career," Mr. McLeod said. "He uses a systematic approach and invests his money wisely in sampling. … His wife and partner, Cathy, is very business-savvy and complements his technical skills perfectly." While Underworld was drilling Mr. Ryan's first property, the prospector was already working on his second discovery in the area, which he optioned to explorer Kaminak Gold Corp. last year. Kaminak recently announced its third discovery on the property in the so-called Double Double zone. Its stock has climbed sevenfold over the past year to around $2.30 and the company recently raised $14.5 million to finance further exploration on the property. "These are really exceptional mining entrepreneurs," said Ali Pejman, managing director of mining at Canaccord Genuity, the lead investment firm for both Kaminak and Underworld. Kinross said it was drawn to the area in part because of its proximity to its Fort Knox mine in Alaska. The acquisition of Underworld "put us in a position to be right in the middle of all of the action in the Yukon, which is where we want to be," said Glen Masterman, vice-president of exploration at Kinross. How soon a mine will be built on the site is unclear. Mr. Masterman said there are years of exploration still ahead. "There are positive signs the resources are robust," he said. For Mr. Ryan, his past discoveries are just the beginning, as he continues to work on finding "one or two more" deposits in the area. "There is more," he said. "Because it is such a new district … we expect to find a few of these in the next few years. It's coming back again — the gold rush from a hundred years ago." * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Meanwhile, the gold market riggers don’t even get their hands dirty Posted: 22 Aug 2010 05:01 PM PDT Trapped Chile Miners Alive But Long Rescue Ahead By Antonio de la Jara and Simon Gardner Reuters Sunday, August 22, 2010 http://www.reuters.com/article/idUSTRE67L1H620100823 SANTIAGO, Chile — Thirty-three Chilean miners trapped deep underground sent a message to the surface tied to a drill on Sunday, saying they were all alive in their first contact since a cave-in 17 days ago, but experts said it would take months to dig them out. President Sebastian Pinera said the paper message was tied to a perforation drill that rescuers used to bore through to the area near an underground shelter, where the miners took shelter after the August 5 collapse at the small gold and copper mine in the far north. "The 33 of us in the shelter are well," read the message written with red paint on the piece of paper that Pinera held up on television. Pinera has vowed a major overhaul of the mining regulator in the world's No.1 copper producer. Rescuers lowered a television camera down the bore hole, and some of the miners looked into the lens. Some were bare-chested because of the heat in the mine, and officials said they looked in better-than-expected condition. Around 200 people gathered in a square in the capital Santiago, waving flags to celebrate the news. Drivers honked their horns and diners applauded in restaurants. "It will take months" to get them out, the beaming president said at the mine head. "It will take time, but it doesn't matter how long it takes to have a happy ending," The miners are 4.5 miles inside the winding mine and about 2,300 feet vertically underground. They are inside a mine shaft shelter the size of a small apartment. Authorities said they had limited amounts of food, and doctors advised sending glucose, enriched mineral water and medicines as well as other foods. Health officials estimated the miners may have lost about 17.5 to 20 pounds (8 to 9 kg) each. Deep in the mine, located near the northern city of Copiapo, there are tanks of water and ventilation shafts that help the miners to survive. They used the batteries of a truck down in the mine to charge their helmet lamps, some of which were shining in the television images. "God is great," 63-year-old Mario Gomez, the eldest of the trapped miners, wrote in a letter to his wife attached to the drill along with the message, which Pinera read on television. "This company has got to modernize," he added. "But I want to tell everyone I'm OK, and am sure we will survive." Relatives hugged, kissed, and thanked God as news of the message spread outside the entrance to the mine, where they have camped out since the mine caved in on August 5. "We never, never lost faith. We knew they were there, and that they would be rescued," said family member Eduardo Hurtado, as other miners' relatives waved red-white-and-blue Chilean flags and cheered. The miners' plight has drawn parallels with the story of 16 people who survived more than 72 days in the Andes mountains after a 1972 plane crash. Their story was later made into the Hollywood movie "Alive." Rescuers plan to send narrow plastic tubes called "doves" down the bore-hole with food, hydration gels and communications equipment. The mine, however, is unstable, and rescue workers were forced to abandon attempts to dig past the main cave-in and down a ventilation shaft. The plan is now to dig a new shaft to enable the trapped miners to leave, which will take months. Rescue workers say it could take as much as 120 days to dig a new tunnel to reach them. Pinera sacked top officials of Chile's mining regulator and vowed a major overhaul of the agency in light of the accident. Serious mining accidents are rare in Chile, but the government says the San Jose mine, owned by local private company Compania Minera San Esteban Primera, has suffered a series of mishaps and 16 workers were killed in recent years. * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Gene Arensberg: Large commercials not aggressively short gold yet Posted: 22 Aug 2010 05:01 PM PDT 8:45p ET Sunday, August 22, 2010 Dear Friend of GATA and Gold (and Silver): Gene Arensberg's "Got Gold Report" is out tonight and it says the large commercial traders have gotten shorter in gold but not aggressively so, and Arensberg wonders if the willingness to short gold amid strong physical demand is diminishing. As for silver, Arensberg finds the data ambiguous but considers silver cheap relative to gold. Arensberg also urges consideration of GATA board member Adrian Douglas' new study, "The Failure of the Second London Gold Pool," which can be found here: http://www.gata.org/node/8936 Arensberg's new "Got Gold Report" can be found here: http://www.gotgoldreportsubscription.com/COT20100822.pdf CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Bullion As An Alternative To Shorting, Part II Posted: 22 Aug 2010 05:01 PM PDT Jeff Nielson submits: In Part I, I discussed the world’s largest and most obvious asset-bubble (excluding the derivatives market): the U.S. Treasuries market. While I pointed out that this market was an obvious target for “shorting”, I also explained to readers why there were simply too many risks associated with shorting this opaque, and highly-manipulated market. I explained that investing in bullion (“long”) was a good “proxy” for shorting U.S. Treasuries, and concluded that this proxy was a safer, superior substitute for that short-position. In this installment, I will apply that analysis to other U.S. asset-classes: the financial sector, and the U.S. dollar, itself. Read more »

German Financial Watchdog Says Gold Is Not Money Posted: 22 Aug 2010 05:01 PM PDT The Prudent Investor submits: Can it get anymore idiotic? The German financial watchdog BaFin has ruled that German mutual fund company DWS may not sell its DWS-Gold fund anymore publicly, because it holds 50% of its funds in gold. BaFin considers gold a commodity of which funds may only hold a maximum share of 30%, Austrian Börse-Express reported. Read more »

The Split Personalities of Platinum and Palladium ETFs Posted: 22 Aug 2010 05:01 PM PDT Morningstar submits: By Abraham Bailin Among commodities, precious metals like gold have been widely adopted as inflationary hedges and "safe-haven" assets because of their traditional store of value. To the layperson, platinum and palladium are merely pricier alternatives to white-gold engagement rings. Fittingly, those interested in commodities exposure may associate the metals with their "precious metals" group cousins. While both platinum and palladium can be used for beautiful and durable jewelry, well-informed investors should be aware that these metals are primarily used in industrial applications and are thus likely to fluctuate with economic ups and downs. Read more »

Gold to make new highs as we trend into 2011 – Foster Posted: 22 Aug 2010 04:52 PM PDT Portfolio Manager Joe Foster of Van Eck Associates gives his views on the near term prospects for the gold price and looks for sound money policies. Gold Report interview. Read more….

Australia Wins Posted: 22 Aug 2010 03:39 PM PDT If Henry David Thoreau was right when he wrote, "That government is best which governs least," then Australia got itself the best government in the world on Saturday. Of course technically speaking, Australia didn't elect a government. And that government which is not a government cannot govern at all. Thus, "not at all" being less than "least", the unelected government not elected on Saturday is best! Okay. Enough of the japery. Let us put our dour and serious face on and see what Saturday's election means for markets... On second thought, let's not be serious. After all, this is a great result, is it not? That would be the unconventional take on things. The conventional take is that market hate uncertainty. What they got on Saturday was an extra portion of uncertainty with a dollop of extra time. But to paraphrase Gordon Gecko, "Gridlock is good." With neither major party able to secure 76 seats in the lower House of Parliament on its own, and with postal and absentee votes to be counted in some key electorates, there may not be an official result for at least a few days, and maybe longer. It's a hung parliament left twisting in the wind. But upon further review, we'd be surprised to see a big move in the currency or the share market in the next few days. Why? Gridlocked governments have to govern from the centre, and they usually don't get very much done. About the only certain result from a grid-locked government is no major legislation will be passed. That's generally a positive result for everyone. If no news is good news, no news laws are good laws. In fact, we'd be willing to offer politicians a raise if they promised to do nothing. Put them on the dole! That the market could rise in such a fluid environment may seem wacky. But it's a wacky world. Given the nature of the status quo, with three of the independent members of the lower House former members of the National party and another National elected in Western Australia, it looks like the Mineral Resource Rent Tax is dead (MRRT). Killing the tax might not be popular with constituencies on the fringe, but it's about the only thing Labor could offer the three ex-Nationals as a sweetener for their vote. On the other hand, Tony Abbott could probably promise some kind of costed, hybrid public-private national broadband network and that might do the trick. It doesn't look a carbon tax or a revised emissions trading scheme will figure in the horse trading. But then, we know nothing in general and even less about Australian politics. It has been an entertaining weekend though. And full credit to the Australian people for voicing their discontent with both parties. One possible outcome, according to former Treasurer Peter Costello, is a weak government that hangs on for a year or so and then is forced to go back to the polls. And that's assuming that one of the parties is able to form a minority government. What would this mean for the share market and the currency? The longer there is uncertainty about the two major policy issues that affect the resource market - the MRRT and the ETS - the more negative it is for Australian stocks. We reckon a weak, one-year government makes it a trader's market, but that's about it. You can't expect a big rebound in Aussie shares until the threat of a mining tax is "de-risked" from the investment picture. That said, one man's uncertainty is another man's Africa. The longer Australian resource projects are in limbo over MRRT doubt, the more appealing similar projects in other countries look. This is why Diggers and Drillers editor Alex Cowie began looking at African projects last year and travelled there. Is there less political risk in Africa - the threat of constantly changing laws - than there is Australia? Probably not. But is there more? Probably not. On an entirely different note, data out from the U.S. government last week showed official Chinese holdings of U.S. Treasury bonds from $938.1 billion September of last year to $843.7 billion in June of this year. That's an 11% decline. How about that? By not rolling over or adding to their U.S. bond holdings, the Chinese slowly reduce their vulnerability to a weaker U.S. dollar. They also, you'd think, slowly dial back their position as the largest creditor to the U.S. government. And who is buying the bonds the Chinese are buying less of? If it's the Federal Reserve, isn't that a rich irony? The Fed would effectively be covering China's retreat from the dollar. It would allow China to gradually exit is dollar position without causing a panic. And meanwhile, the end result - the destruction of the U.S currency - would be accomplished vie debt monetisation by the Fed. Pretty nifty. Nice work Fed. Dan Denning for The Daily Reckoning Australia Similar Posts: De-risking Australia Energy Debate in Australia Needs to Get Serious Apparently More Debt is Now Acceptable in Australia Foreign Investment in Australia, How Much is Too Much? Australia & China: Already Partners in the Commodity Boom

GLD – Gold ETF Daily Chart Posted: 22 Aug 2010 03:21 PM PDT Prices continue to churn as traders and investors try to figure if they want their hard earned dollar in cash or investments. The market is very jittery simply because no one wants to get caught on the wrong side of the market if it makes another 30-40% move, which is why we [...]

Israel Knesset Member Declares "We Are Preparing For War" Posted: 22 Aug 2010 01:55 PM PDT In an interview by Likud Knesset Member Danny Danon, speaking with WND senior reporter Aaron Klein, who hosts an investigative program on New York's WABC 770 AM Radio, the Israeli said that "Israel is preparing for a time of war...We are ready for all scenarios, and we are able to defend our civilian population. I cannot tell you how long we can wait more. But we prefer to wait and see if the international bodies are acting, or [whether] it will be only the burden of Israel, like it was in the early '80s, when the great leader, Menachem Begin, [made] the great decision to bomb the nuclear reactor in Iraq." He concluded: "We don't want this to be a war of Jews against Muslims. It should be a war of Western civilization [against] Iran." Good luck explaining that to 1.5 billion Muslims around the world. From 77WABC Radio, specifically WND's Jerusalem Bureau: While Israel is hoping for a peaceful resolution to Iran's nuclear ambitions, the Jewish state is also preparing for "a time of war," declared a Knesset member of Prime Minister Benjamin Netanyahu's ruling Likud party. "We are prepared for all risks," said Likud Knesset Member Danny Danon. "And I think our enemies should know that even though we are speaking of peace, we are getting ready for a time of war, as well." Danon, the deputy speaker of Israel's parliament, was speaking in a radio interview with WND senior reporter Aaron Klein, who hosts an investigative program on New York's WABC 770 AM Radio. Danon hinted that Israel may take action if the world does not stop the Iranian nuclear threat, recalling Israel's lone strike on Iraq's nuclear reactor in 1981. Stated Danon: "We are ready for all scenarios, and we are able to defend our civilian population. I cannot tell you how long we can wait more. But we prefer to wait and see if the international bodies are acting, or [whether] it will be only the burden of Israel, like it was in the early '80s, when the great leader, Menachem Begin, [made] the great decision to bomb the nuclear reactor in Iraq." Despite his assertion that Jerusalem is preparing to act alone, Danon stressed that Iran is an international concern. He called on the Western world to "take action" against Iran's suspected illicit nuclear program. "I think we have to take action," he said. "It's about time to take action. It should be the international world and not only Israel. And I expect the administration in the White House to wake up as soon as possible." Danon said he is concerned the international community has not been forceful enough in its policies toward Iran. "What we see today is that the Russians, the Americans, the Europeans all say they are worried about Iran becoming nuclear, but in fact Iran is working full ahead, and it's only a matter of months or a year before they will be reaching the point of no return," he said. Danon stated that any future military confrontation against Iran "should be an international effort." "We don't want this to be a war of Jews against Muslims. It should be a war of Western civilization [against] Iran," he said. "The threat of Iran becoming nuclear is a threat for the people who live in the U.S., Europe and Israel." he said. "No one can guarantee that Iran will use its power only against Israel." And with that, we look forward to another stock meltup tomorrow. The full interview can be heard after the jump.

Eureka moment for stubborn Yukon prospector who wouldn't give up Posted: 22 Aug 2010 01:44 PM PDT By Brenda Bouw The Globe and Mail, Toronto Tuesday, August 16, 2010 http://www.theglobeandmail.com/report-on-business/industry-news/energy-a... Gold fever is gripping Yukon for the first time in more than a century following a discovery by a penniless and persistent prospector who was determined to find the source of the original Klondike deposits. Shawn Ryan lived in a tin shack for years before uncovering the so-called White Gold district, not far from the fabled Klondike zones. While his work has yet to result in an operating mine, it has already sparked a record-setting staking rush and led to the multimillion-dollar takeover of a junior gold explorer by a senior producer. More deals are expected as junior mining companies flock to the area around Mr. Ryan's findings and raise millions to finance further exploration, making big bets on what they hope will be the next mother lode of gold. ... Dispatch continues below ... ADVERTISEMENT Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource 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 Michael Wark, executive director of the Yukon Chamber of Mines, said Mr. Ryan may in fact have discovered a source of the Klondike gold from the late 1800s, but "regardless, they have a significant gold discovery there." For Mr. Ryan, the discovery in the area south of Dawson City, near where the White and Yukon rivers meet, is the reward for the years spent hunting for gold in the heart of one of the world's most storied mining districts. The area was made famous by the Klondike gold rush of 1896, but has received only sporadic attention since. In recent years, other companies came close to making the same discovery as Mr. Ryan, but walked away after running out of money or deciding other opportunities looked better. Mr. Ryan hung in. He and his wife, Cathy Wood, and eventually two children, pinched pennies for years, surviving mostly on an annual $10,000 exploration grant from the Yukon government. Living on the outskirts of Dawson City, they paid $250 a month to rent a 365-square-foot tin shack that had served as the local barbershop at the turn of the previous century. In 2004, after about eight years of hunching over maps and sampling soil, Mr. Ryan finally found the first signs of what he had been digging for so deeply, when assay results indicated geochemical markers associated with gold. It took a few years for others to take notice, but now that they have, other exploration firms are flooding into the area, bringing with them a much-needed boost for local businesses ranging from hotels to helicopter companies. The number of mining claims in Yukon surged to just under 110,000 in the first seven months of this year, about 38 per cent more than all of 2009, which itself was a record year with just under 80,000 claims. Prospectors obtain claim tags from the mining recorder, a unit of the territorial government, then stake their claims on Crown land, in the traditional manner by using posts to mark out a rectangle no bigger than 1,500 feet on each side. Each claim costs $10 and prospectors have to do at least $100 of work a year on each claim (or pay $100) to maintain their rights to the land. The staking rush has turned Mr. Ryan into a hometown hero. "He's a gem for Dawson," said Josee Savard, who has been operating Klondike Kate's Restaurant & Cabins with her husband in the town for the past two decades. Mr. Ryan's story is a rags-to-riches tale of a miner's son from Timmins, Ont., who moved west as a young man for a job in the bush picking morel mushrooms. He met his future wife at work. It was when she was seven months pregnant that the two decided they needed to find a new way to make a living. Mr. Ryan, who had done some geological work for his dad's company when he was younger and wanted to go on working outdoors, decided to become a prospector. Today the self-taught geologist has become one of the rare prospectors to hit the jackpot. He has made millions through the share options and cash that he has received, and will become even richer if one of the properties he has uncovered turns into an operating gold mine and he begins collecting royalties on the output. Mr. Ryan and his wife now run Ryanwood Exploration Inc., a geology consultant that has expanded to more than 50 employees. "There haven't been too many prospectors who found a discovery that opened up a mine. That will be neat if that happens," Mr. Ryan, 47, said in a recent interview from his home in Dawson City, which he describes as an upgraded 900-square-foot shack. The secret behind his fairy-tale success? Science, persistence, and a lot of patience. Mr. Ryan believed that the source of the Klondike gold rush was out there, somewhere. He did his homework, and discovered that the White Gold region had unique soil that provided good clues as to what might lie beneath the surface. Navigating by those clues, he dug deeper than most prospectors had in the past. Then he stuck with it, for years. "It's just perseverance. A prospector has to believe there is something out there. Now it's just coming true. I can tell people, 'See, I told you so.' I always believed in it," said Mr. Ryan, who is moving to Whitehorse in the coming weeks with his wife and two children, now 12 and 14. "I kind of feel like the Clampetts on the way to Whitehorse and into a bigger house," Mr. Ryan joked. The family also went on their first vacation this summer, a two-week trip to Europe. While Mr. Ryan has become the latest poster boy for prospectors, his road to riches was long and rocky. The first option agreement he signed with a junior mining company around 2004 fell through after less that two years, when the company decided it wanted to pursue oil and gas exploration instead. Mr. Ryan continued working the property and brought the data to a mining conference in Toronto in 2007. It was there that his work began to attract attention. One startup company, Underworld Resources, was particularly eager to get its hand on the property. "Even though it was an early-stage property" -- never been drilled before -- "it had all of the geological and geochemical indicators that I look for in a property," Rob McLeod, founder of Underworld and now head of exploration at Full Metal Minerals, said in a recent e-mail to The Globe and Mail. "We knew that there were other junior and possibly major companies that also wanted to option the property from Shawn, so we offered a very generous deal, including a lot of Underworld shares and a good royalty. Fortunately we had the best bid, and the rest is history. Some said we paid too much at the time." Underworld hit gold on only its fourth drill hole, an amazingly fast result in the mining business. The grade proved to be higher than expected and, as more drilling led to more positive results, the discovery caught the attention of Kinross Gold Corp., a Toronto-based producer. Last summer Kinross bought an 11-percent stake in Underworld and then took over the entire company nine months later for about $138 million, a 50-percent premium to Underworld's average trading price before the acquisition. "That made it real ... it validates the discovery," said Michael Gray, an analyst at Macquarie Securities. It also resulted in Mr. Ryan being named Prospector of the Year by the British Columbia mineral exploration industry. "Shawn is the most talented prospector I've met in my career," Mr. McLeod said. "He uses a systematic approach and invests his money wisely in sampling. ... His wife and partner, Cathy, is very business-savvy and complements his technical skills perfectly." While Underworld was drilling Mr. Ryan's first property, the prospector was already working on his second discovery in the area, which he optioned to explorer Kaminak Gold Corp. last year. Kaminak recently announced its third discovery on the property in the so-called Double Double zone. Its stock has climbed sevenfold over the past year to around $2.30 and the company recently raised $14.5 million to finance further exploration on the property. "These are really exceptional mining entrepreneurs," said Ali Pejman, managing director of mining at Canaccord Genuity, the lead investment firm for both Kaminak and Underworld. Kinross said it was drawn to the area in part because of its proximity to its Fort Knox mine in Alaska. The acquisition of Underworld "put us in a position to be right in the middle of all of the action in the Yukon, which is where we want to be," said Glen Masterman, vice-president of exploration at Kinross. How soon a mine will be built on the site is unclear. Mr. Masterman said there are years of exploration still ahead. "There are positive signs the resources are robust," he said. For Mr. Ryan, his past discoveries are just the beginning, as he continues to work on finding "one or two more" deposits in the area. "There is more," he said. "Because it is such a new district ... we expect to find a few of these in the next few years. It's coming back again -- the gold rush from a hundred years ago." * * * Join GATA here: Toronto Resource Investment Conference Saturday-Sunday, September 25-26, 2010 Metro Toronto Convention Center, Toronto, Ontario, Canada http://www.cambridgeconferences.com/index.php/toronto-resource-investmen... The Silver Summit Thursday-Friday, October 21-22, 2010 Davenport Hotel, Spokane, Washington http://www.silversummit.com/ New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts 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: http://www.goldrush21.com/ * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, Plans Aggressive Exploration of Elizabeth Gold Property 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

Eureka moment for stubborn Yukon prospector who wouldn't give up Posted: 22 Aug 2010 01:44 PM PDT By Brenda Bouw The Globe and Mail, Toronto Tuesday, August 16, 2010 http://www.theglobeandmail.com/report-on-business/industry-news/energy-a... Gold fever is gripping Yukon for the first time in more than a century following a discovery by a penniless and persistent prospector who was determined to find the source of the original Klondike deposits. Shawn Ryan lived in a tin shack for years before uncovering the so-called White Gold district, not far from the fabled Klondike zones. While his work has yet to result in an operating mine, it has already sparked a record-setting staking rush and led to the multimillion-dollar takeover of a junior gold explorer by a senior producer. More deals are expected as junior mining companies flock to the area around Mr. Ryan's findings and raise millions to finance further exploration, making big bets on what they hope will be the next mother lode of gold. ... Dispatch continues below ... ADVERTISEMENT Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource 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 Michael Wark, executive director of the Yukon Chamber of Mines, said Mr. Ryan may in fact have discovered a source of the Klondike gold from the late 1800s, but "regardless, they have a significant gold discovery there." For Mr. Ryan, the discovery in the area south of Dawson City, near where the White and Yukon rivers meet, is the reward for the years spent hunting for gold in the heart of one of the world's most storied mining districts. The area was made famous by the Klondike gold rush of 1896, but has received only sporadic attention since. In recent years, other companies came close to making the same discovery as Mr. Ryan, but walked away after running out of money or deciding other opportunities looked better. Mr. Ryan hung in. He and his wife, Cathy Wood, and eventually two children, pinched pennies for years, surviving mostly on an annual $10,000 exploration grant from the Yukon government. Living on the outskirts of Dawson City, they paid $250 a month to rent a 365-square-foot tin shack that had served as the local barbershop at the turn of the previous century. In 2004, after about eight years of hunching over maps and sampling soil, Mr. Ryan finally found the first signs of what he had been digging for so deeply, when assay results indicated geochemical markers associated with gold. It took a few years for others to take notice, but now that they have, other exploration firms are flooding into the area, bringing with them a much-needed boost for local businesses ranging from hotels to helicopter companies. The number of mining claims in Yukon surged to just under 110,000 in the first seven months of this year, about 38 per cent more than all of 2009, which itself was a record year with just under 80,000 claims. Prospectors obtain claim tags from the mining recorder, a unit of the territorial government, then stake their claims on Crown land, in the traditional manner by using posts to mark out a rectangle no bigger than 1,500 feet on each side. Each claim costs $10 and prospectors have to do at least $100 of work a year on each claim (or pay $100) to maintain their rights to the land. The staking rush has turned Mr. Ryan into a hometown hero. "He's a gem for Dawson," said Josee Savard, who has been operating Klondike Kate's Restaurant & Cabins with her husband in the town for the past two decades. Mr. Ryan's story is a rags-to-riches tale of a miner's son from Timmins, Ont., who moved west as a young man for a job in the bush picking morel mushrooms. He met his future wife at work. It was when she was seven months pregnant that the two decided they needed to find a new way to make a living. Mr. Ryan, who had done some geological work for his dad's company when he was younger and wanted to go on working outdoors, decided to become a prospector. Today the self-taught geologist has become one of the rare prospectors to hit the jackpot. He has made millions through the share options and cash that he has received, and will become even richer if one of the properties he has uncovered turns into an operating gold mine and he begins collecting royalties on the output. Mr. Ryan and his wife now run Ryanwood Exploration Inc., a geology consultant that has expanded to more than 50 employees. "There haven't been too many prospectors who found a discovery that opened up a mine. That will be neat if that happens," Mr. Ryan, 47, said in a recent interview from his home in Dawson City, which he describes as an upgraded 900-square-foot shack. The secret behind his fairy-tale success? Science, persistence, and a lot of patience. Mr. Ryan believed that the source of the Klondike gold rush was out there, somewhere. He did his homework, and discovered that the White Gold region had unique soil that provided good clues as to what might lie beneath the surface. Navigating by those clues, he dug deeper than most prospectors had in the past. Then he stuck with it, for years. "It's just perseverance. A prospector has to believe there is something out there. Now it's just coming true. I can tell people, 'See, I told you so.' I always believed in it," said Mr. Ryan, who is moving to Whitehorse in the coming weeks with his wife and two children, now 12 and 14. "I kind of feel like the Clampetts on the way to Whitehorse and into a bigger house," Mr. Ryan joked. The family also went on their first vacation this summer, a two-week trip to Europe. While Mr. Ryan has become the latest poster boy for prospectors, his road to riches was long and rocky. The first option agreement he signed with a junior mining company around 2004 fell through after less that two years, when the company decided it wanted to pursue oil and gas exploration instead. Mr. Ryan continued working the property and brought the data to a mining conference in Toronto in 2007. It was there that his work began to attract attention. One startup company, Underworld Resources, was particularly eager to get its hand on the property. "Even though it was an early-stage property" -- never been drilled before -- "it had all of the geological and geochemical indicators that I look for in a property," Rob McLeod, founder of Underworld and now head of exploration at Full Metal Minerals, said in a recent e-mail to The Globe and Mail. "We knew that there were other junior and possibly major companies that also wanted to option the property from Shawn, so we offered a very generous deal, including a lot of Underworld shares and a good royalty. Fortunately we had the best bid, and the rest is history. Some said we paid too much at the time." Underworld hit gold on only its fourth drill hole, an amazingly fast result in the mining business. The grade proved to be higher than expected and, as more drilling led to more positive results, the discovery caught the attention of Kinross Gold Corp., a Toronto-based producer. Last summer Kinross bought an 11-percent stake in Underworld and then took over the entire company nine months later for about $138 million, a 50-percent premium to Underworld's average trading price before the acquisition. "That made it real ... it validates the discovery," said Michael Gray, an analyst at Macquarie Securities. It also resulted in Mr. Ryan being named Prospector of the Year by the British Columbia mineral exploration industry. "Shawn is the most talented prospector I've met in my career," Mr. McLeod said. "He uses a systematic approach and invests his money wisely in sampling. ... His wife and partner, Cathy, is very business-savvy and complements his technical skills perfectly." While Underworld was drilling Mr. Ryan's first property, the prospector was already working on his second discovery in the area, which he optioned to explorer Kaminak Gold Corp. last year. Kaminak recently announced its third discovery on the property in the so-called Double Double zone. Its stock has climbed sevenfold over the past year to around $2.30 and the company recently raised $14.5 million to finance further exploration on the property. "These are really exceptional mining entrepreneurs," said Ali Pejman, managing director of mining at Canaccord Genuity, the lead investment firm for both Kaminak and Underworld. Kinross said it was drawn to the area in part because of its proximity to its Fort Knox mine in Alaska. The acquisition of Underworld "put us in a position to be right in the middle of all of the action in the Yukon, which is where we want to be," said Glen Masterman, vice-president of exploration at Kinross. How soon a mine will be built on the site is unclear. Mr. Masterman said there are years of exploration still ahead. "There are positive signs the resources are robust," he said. For Mr. Ryan, his past discoveries are just the beginning, as he continues to work on finding "one or two more" deposits in the area. "There is more," he said. "Because it is such a new district ... we expect to find a few of these in the next few years. It's coming back again -- the gold rush from a hundred years ago." * * * Join GATA here: Toronto Resource Investment Conference Saturday-Sunday, September 25-26, 2010 Metro Toronto Convention Center, Toronto, Ontario, Canada http://www.cambridgeconferences.com/index.php/toronto-resource-investmen... The Silver Summit Thursday-Friday, October 21-22, 2010 Davenport Hotel, Spokane, Washington http://www.silversummit.com/ New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts 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: http://www.goldrush21.com/ * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, Plans Aggressive Exploration of Elizabeth Gold Property 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

Ron Paul: Washington Is Destined to Destroy the Dollar Posted: 22 Aug 2010 01:28 PM PDT Dr. Ron Paul speaks with Goldseek Radio about government tracking of gold purchases, shortages at the US Mint, investing in gold coins vs gold stocks, and the Free Competition in Currency Act. Paul addresses the section of the recently passed health care monstrosity requiring businesses to submit a 1099 for all purchases of $600 a year beginning in January 2012. He believes this may lead to further tracking of gold purchases. The Texas Congressman also speaks on two of his bills, the SEC Transparency Act (H.R 5970) and the Free Competition in Currency Act (H.R. 4248). H.R. 5970 would eliminate the section of Obamacare that grants the SEC immunity from freedom of information requests. H.R. 4248 would legalize competing currencies and help free up the market from the monopoly of the private Federal Reserve. "We're printing money, we're spending money, we have not reformed Washington. They're destined to destroy the dollar, which means not that the gold price is going up, but the value of gold will be maintained. The value of the dollar is destined to go down." Link Here.. This posting includes an audio/video/photo media file: Download Now

Deutschland Uber Alles Grasshoppers Posted: 22 Aug 2010 01:27 PM PDT It has been 65 years since Europe's last major war. Still, when Germany gets up off its knees, the continent trembles. Last week, the Berlin government announced the best results since the wall fell in '89. From the first quarter to the second one the republic's GDP rose 2.2%. At that rate - about 9% a year if it continues - Germany is running neck and neck with China. Compared to France and the US, Germany is flying nearly 4 times as fast. Greece meanwhile is backing up. Its economy shrank 1.5% last quarter. The Teuton tribes are an aggressive lot. The Usipetes, Tenchteri, Batavi, Cherusci, Chatti, Vandals, Goths, Franks, Alans, Suebians - all jostled each other for centuries. They must have gotten a taste for competition. And when Rome wheezed her last gasps they fell on her like French tax collectors on a widow's estate. The Vandals pushed all the way across Gaul and Iberia, crossed to North Africa, and from their new base in Carthage, continued to tickle the old Empire until it rolled over on them. Everybody has his elbows out. But competition takes many forms. Better to build Audis and Mercedes than Tigers and Messerschmitts. Better to race for market share than for the Champs Élysée. Whatever form it takes, competition isn't likely to stop. Happily, most of the time, it is a boon to everyone - even to the losers. That's why Germany's current success is only a threat to the economists and commentarists who've been giving her advice. The rest of us hold our breath and hope for more. It was only a month ago that Martin Wolf led a "great debate" on how governments should react to the financial crisis. Of all the ideas to come out of financial crisis of '07, Wolf proposed one of the most remarkable. He illustrated it with the fable of the ant and the grasshopper. He saw two types of economies. There were those that produced and those that consumed. The trouble, according to Wolf, was that the two didn't compete at all. Instead, they lived in a kind of symbiotic parasitism. The grasshoppers lived off the labors of the ants. Not only did the grasshoppers make the things that the ants used, the ants took the grasshoppers' money and lent it back to them, so they could buy more. The grasshoppers were ruining themselves. But the ants were making a mistake too. They were building up capital, but what could they do with it? There was no point in expanding output capacity; arguably, they already produced too much. And what could they buy? The grasshoppers had nothing to sell. That was not the worst of it. When the grasshoppers had spent too much, said Wolf, both bugs were trapped. If the grasshoppers in Spain and Greece were forced to spend less, the ants in Düsseldorf were condemned to sell less. Their economies were doomed to go down together, like galley slaves chained to a sinking ship. In any case, it looked like the sort of thing the fixers could fix. Germany is all make. Greece is all take. The system was out of whack. Trade flows must balance out to zero, so Wolf et al concluded that the problem could be corrected on either side. Germany could stop working so hard and exporting so much stuff it didn't want. Or, Greece could stop spending so much money it didn't have. Since any slowdown in spending threatens the "recovery," it would be better for Germans to do more spending themselves. They should raise wages and encourage their own people to buy more Audis...more ouzo...and more pointy shoes with curled up toes. This was no time for austerity. They misunderstood the problem. Imagine two men marooned on an island. They barely survive. One works hard, hunting, gathering, and planting. The other dances on the beach like Zorba, depending on the kindness of his companion for his daily rations. The problem is not the lack of balance. The problem is the slacker. You could redress the balance between them by getting the productive one to slack off too. But then, they'd both starve. The euro was seen as part of the problem, too. It was either too low for Germany or too high for Greece, said analysts. In the good old days, Greece could have pulled a fast one, devaluing its currency to make its citizens poorer, and their labor and exports cheaper. But now, there is no cheap and easy solution. Which set us to a-wondering about how the world possibly got to where it is. For the hundred years from the end of the Napoleonic Wars to the beginning of WWII, Europe was rarely happier, more prosperous...or more at peace. Yet during that time, money was even more inflexible than the euro. Governments did not commit premeditated murder of their own currencies. Instead, the value of paper money was protected by gold. People competed by working harder, saving more, and figuring out how to produce more with less - just as the Germans are doing now. This week, the Merkel team followed up. "The lady's not for turning," Ms. Merkel might have said, taking a line from Margaret Thatcher's 1980 Brighton speech. With the pressure off its budget, the commentators thought the Germans might be tempted to ease up on their austerity program. Instead, the German government will continue to pursue cuts to military and social spending, she said. Success will not distract Germany from its austerity program. Whether failure will send it off the rails is a question to be answered later. Regards, Bill Bonner for The Daily Reckoning Australia Similar Posts: Chermany vs. Gremerica Exporting Economic Growth Phony Choices from a Bogus Profession In the Name of Debt European Governments of the Eurozone are Separately Responsible for Their Euro-debt

China Ditches US Currency - Are Times Changing? Posted: 22 Aug 2010 01:24 PM PDT We all know the US flogs its debt to anyone willing to buy it. And up until recently, that's been China. Very slowly, over the past twelve months China has been lowering its exposure to US treasuries. Read More...

Meanwhile, the gold market riggers don't even get their hands dirty Posted: 22 Aug 2010 01:05 PM PDT Trapped Chile Miners Alive But Long Rescue Ahead By Antonio de la Jara and Simon Gardner Reuters Sunday, August 22, 2010 http://www.reuters.com/article/idUSTRE67L1H620100823 SANTIAGO, Chile -- Thirty-three Chilean miners trapped deep underground sent a message to the surface tied to a drill on Sunday, saying they were all alive in their first contact since a cave-in 17 days ago, but experts said it would take months to dig them out. President Sebastian Pinera said the paper message was tied to a perforation drill that rescuers used to bore through to the area near an underground shelter, where the miners took shelter after the August 5 collapse at the small gold and copper mine in the far north. "The 33 of us in the shelter are well," read the message written with red paint on the piece of paper that Pinera held up on television. Pinera has vowed a major overhaul of the mining regulator in the world's No.1 copper producer. ... Dispatch continues below ... ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, Plans Aggressive Exploration of Elizabeth Gold Property 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 Rescuers lowered a television camera down the bore hole, and some of the miners looked into the lens. Some were bare-chested because of the heat in the mine, and officials said they looked in better-than-expected condition. Around 200 people gathered in a square in the capital Santiago, waving flags to celebrate the news. Drivers honked their horns and diners applauded in restaurants. "It will take months" to get them out, the beaming president said at the mine head. "It will take time, but it doesn't matter how long it takes to have a happy ending," The miners are 4.5 miles inside the winding mine and about 2,300 feet vertically underground. They are inside a mine shaft shelter the size of a small apartment. Authorities said they had limited amounts of food, and doctors advised sending glucose, enriched mineral water and medicines as well as other foods. Health officials estimated the miners may have lost about 17.5 to 20 pounds (8 to 9 kg) each. Deep in the mine, located near the northern city of Copiapo, there are tanks of water and ventilation shafts that help the miners to survive. They used the batteries of a truck down in the mine to charge their helmet lamps, some of which were shining in the television images. "God is great," 63-year-old Mario Gomez, the eldest of the trapped miners, wrote in a letter to his wife attached to the drill along with the message, which Pinera read on television. "This company has got to modernize," he added. "But I want to tell everyone I'm OK, and am sure we will survive." Relatives hugged, kissed, and thanked God as news of the message spread outside the entrance to the mine, where they have camped out since the mine caved in on August 5. "We never, never lost faith. We knew they were there, and that they would be rescued," said family member Eduardo Hurtado, as other miners' relatives waved red-white-and-blue Chilean flags and cheered. The miners' plight has drawn parallels with the story of 16 people who survived more than 72 days in the Andes mountains after a 1972 plane crash. Their story was later made into the Hollywood movie "Alive." Rescuers plan to send narrow plastic tubes called "doves" down the bore-hole with food, hydration gels and communications equipment. The mine, however, is unstable, and rescue workers were forced to abandon attempts to dig past the main cave-in and down a ventilation shaft. The plan is now to dig a new shaft to enable the trapped miners to leave, which will take months. Rescue workers say it could take as much as 120 days to dig a new tunnel to reach them. Pinera sacked top officials of Chile's mining regulator and vowed a major overhaul of the agency in light of the accident. Serious mining accidents are rare in Chile, but the government says the San Jose mine, owned by local private company Compania Minera San Esteban Primera, has suffered a series of mishaps and 16 workers were killed in recent years. * * * Join GATA here: Toronto Resource Investment Conference Saturday-Sunday, September 25-26, 2010 Metro Toronto Convention Center, Toronto, Ontario, Canada http://www.cambridgeconferences.com/index.php/toronto-resource-investmen... The Silver Summit Thursday-Friday, October 21-22, 2010 Davenport Hotel, Spokane, Washington http://www.silversummit.com/ New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts 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: http://www.goldrush21.com/ * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource 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

Meanwhile, the gold market riggers don't even get their hands dirty Posted: 22 Aug 2010 01:05 PM PDT Trapped Chile Miners Alive But Long Rescue Ahead By Antonio de la Jara and Simon Gardner Reuters Sunday, August 22, 2010 http://www.reuters.com/article/idUSTRE67L1H620100823 SANTIAGO, Chile -- Thirty-three Chilean miners trapped deep underground sent a message to the surface tied to a drill on Sunday, saying they were all alive in their first contact since a cave-in 17 days ago, but experts said it would take months to dig them out. President Sebastian Pinera said the paper message was tied to a perforation drill that rescuers used to bore through to the area near an underground shelter, where the miners took shelter after the August 5 collapse at the small gold and copper mine in the far north. "The 33 of us in the shelter are well," read the message written with red paint on the piece of paper that Pinera held up on television. Pinera has vowed a major overhaul of the mining regulator in the world's No.1 copper producer. ... Dispatch continues below ... ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, Plans Aggressive Exploration of Elizabeth Gold Property 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 Rescuers lowered a television camera down the bore hole, and some of the miners looked into the lens. Some were bare-chested because of the heat in the mine, and officials said they looked in better-than-expected condition. Around 200 people gathered in a square in the capital Santiago, waving flags to celebrate the news. Drivers honked their horns and diners applauded in restaurants. "It will take months" to get them out, the beaming president said at the mine head. "It will take time, but it doesn't matter how long it takes to have a happy ending," The miners are 4.5 miles inside the winding mine and about 2,300 feet vertically underground. They are inside a mine shaft shelter the size of a small apartment. Authorities said they had limited amounts of food, and doctors advised sending glucose, enriched mineral water and medicines as well as other foods. Health officials estimated the miners may have lost about 17.5 to 20 pounds (8 to 9 kg) each. Deep in the mine, located near the northern city of Copiapo, there are tanks of water and ventilation shafts that help the miners to survive. They used the batteries of a truck down in the mine to charge their helmet lamps, some of which were shining in the television images. "God is great," 63-year-old Mario Gomez, the eldest of the trapped miners, wrote in a letter to his wife attached to the drill along with the message, which Pinera read on television. "This company has got to modernize," he added. "But I want to tell everyone I'm OK, and am sure we will survive." Relatives hugged, kissed, and thanked God as news of the message spread outside the entrance to the mine, where they have camped out since the mine caved in on August 5. "We never, never lost faith. We knew they were there, and that they would be rescued," said family member Eduardo Hurtado, as other miners' relatives waved red-white-and-blue Chilean flags and cheered. The miners' plight has drawn parallels with the story of 16 people who survived more than 72 days in the Andes mountains after a 1972 plane crash. Their story was later made into the Hollywood movie "Alive." Rescuers plan to send narrow plastic tubes called "doves" down the bore-hole with food, hydration gels and communications equipment. The mine, however, is unstable, and rescue workers were forced to abandon attempts to dig past the main cave-in and down a ventilation shaft. The plan is now to dig a new shaft to enable the trapped miners to leave, which will take months. Rescue workers say it could take as much as 120 days to dig a new tunnel to reach them. Pinera sacked top officials of Chile's mining regulator and vowed a major overhaul of the agency in light of the accident. Serious mining accidents are rare in Chile, but the government says the San Jose mine, owned by local private company Compania Minera San Esteban Primera, has suffered a series of mishaps and 16 workers were killed in recent years. * * * Join GATA here: Toronto Resource Investment Conference Saturday-Sunday, September 25-26, 2010 Metro Toronto Convention Center, Toronto, Ontario, Canada http://www.cambridgeconferences.com/index.php/toronto-resource-investmen... The Silver Summit Thursday-Friday, October 21-22, 2010 Davenport Hotel, Spokane, Washington http://www.silversummit.com/ New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts 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: http://www.goldrush21.com/ * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource 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

James Turk: Manipulating the silver market Posted: 22 Aug 2010 12:28 PM PDT 8:25p ET Sunday, August 22, 2010 Dear Friend of GATA and Gold (and Silver): GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, writes tonight that silver is in the middle of "a textbook case of market manipulation" until this month's futures options expire. But Turk adds that silver has nearly completed a two-year accumulation pattern and he expects it to break upward soon. Turk's commentary is headlined "Manipulating the Silver Market" and you can find it at the FGMR Internet site here: http://www.fgmr.com/manipulating-the-silver-market.html CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, Plans Aggressive Exploration of Elizabeth Gold Property 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 Join GATA here: Toronto Resource Investment Conference Saturday-Sunday, September 25-26, 2010 Metro Toronto Convention Center, Toronto, Ontario, Canada http://www.cambridgeconferences.com/index.php/toronto-resource-investmen... The Silver Summit Thursday-Friday, October 21-22, 2010 Davenport Hotel, Spokane, Washington http://www.silversummit.com/ New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts 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: http://www.goldrush21.com/ * * * 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: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource 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

On the Importance of Vacation Posted: 22 Aug 2010 12:18 PM PDT What's the score from yesterday? Dow down 144. Gold plus 4. The stock market looks like it wants to roll over. Whether it will or not, we don't know. We'll just have to wait to find out. In the meantime... "Dad... I guess I should be back in LA working..." said Maria, after we reviewed her finances. She earns her living as a model and actress. But it is not a great living. Her chosen career is like that of a professional athlete. A few of them make big money. Most struggle to make ends meet. Maria does okay. She has learned from her father not to borrow money. So when she bought a car - a spiffy Mini Cooper convertible - she wanted to pay cash. She went to cash out some of her stocks, but a broker talked her into leaving the stocks in the portfolio and taking a cash advance against it. This was great for the broker. He earned a fee from the loan. But it only made sense for Maria if her stocks rose more than the loan charges. Not a good bet in this market. Besides, if she wanted to borrow money she would be better off borrowing from dear old dad. "I probably should have stayed in LA...because I need the money. It's expensive to come over here. I mean, there's the airfare...but also the money I don't make." "Don't worry about it," said Dad. "Most people are far too busy in general...and too busy earning a living to make any real money. They get caught up in it. Their incomes go up. So they increase their expenses. The more they earn, the more they have to earn. And it just goes on and on...with no time to really think...and no chance to do anything that takes a long time. Most people can't take a year off from work. Many can't take a week off. They can't afford it. "But it's probably a good idea to take some time off. I've become very suspicious of busy-ness. You know, all those fellows who earned their MBAs or their Ph.Ds. in finance and business? They went to Wall Street and worked liked devils. Dashing to Cleveland to do a deal...rushing to London for a meeting...a cell phone in one hand...a Blackberry in the other...working until 1AM...feverishly churning paper. "What good was it? Wall Street is supposed to allocating capital efficiently so that the free market economy can make progress. What they were really doing was creating a kind of Bubble Finance - trying to make as many deals as possible in order to earn fees. And all the deals involved adding debt to the system. "And they were so busy doing it that they didn't bother to notice what was really going on. You should read some of the transcripts of testimony by the people running big Wall Street firms. Or just talk to some of the people doing the deals. They were going at it like demons. But they never stopped to reflect on what they were really doing or what good it was doing. So, when the crisis came, they didn't know what was hitting them. The dumbbells discovered that not only did they monger a lot of debt, the also bought it...and held it in their own vaults. Of course, Lehman didn't survive. The others only made it through by leaning on the taxpayers. "The whole thing was comical and absurd..." "Dad, are you getting off-topic here?" Maria interrupted. "No, no... This is my point. Here were the best educated, smartest, highest-earning people in the country. And they couldn't see that they were on the edge of bankruptcy. Why not? Because they were too busy earning money! "The average fellow does that too. He works so hard...and he spends so much money...that he can't see that he's always right on the edge of going bust. He has no margin. No cushion. He doesn't take the time to think through what he is doing and why. "I work hard most of the year. From 8 in the morning to 8 at night, more or less. I've done that for the last 40 years. But when August comes around, I try to downshift. Instead of racing down the highway...I want to take a little back road and meander a bit...see where it leads. "I might even stop for a picnic...or sit in a chair and read a book I wouldn't ordinarily read...or think about what I'm doing...about who I am and what I really want...about what is important and how to get it... " "Dad, you are a big BS-er. You know perfectly well you never slow down. You come here and you work all day, just like at home. And you get mad when someone interrupts you. You're just painting shutters and fixing doors, rather than working in the office." "Yeah...but I can think while I'm painting..." *** Next week...a house you can build for peanuts...and then be free of utility bills forever! But first, today's column... Yes, Dear reader, the Great Correction continues...with the US middle class "on the way down," says Der Spiegel. Here's what Germany's leading newsmagazine has to say on the subject: The Erosion of America's Middle Class While America's super-rich congratulate themselves on donating billions to charity, the rest of the country is worse off than ever. Long-term unemployment is rising and millions of Americans are struggling to survive. The gap between rich and poor is wider than ever and the middle class is disappearing. Finley calls them "the new poor." "That is a different category of people that I think we're seeing," he says. "They are people who never in their wildest imaginations thought they would be homeless." They're people who had enough money - a lot of money, in some cases - until recently. "The image of what is a poor person in today's day and age doesn't fly. When I was growing up a poor person, and we grew up fairly poor, you drove a 10-year-old car that probably had some dents in it. You know, there was one car for the family and you lived out of the food bank," says Finley. "In the past, you got yourself out of poverty and were on your way up." It was the American way, a path taken by millions. "Today the image is you're getting newer late model cars that at one point cost somebody 40, 50 grand, and they're at wits end, now they're living out of the food banks. And for many of them it takes a lot to swallow their pride," says Finley. Today the American way is often headed in the opposite direction: downward. Two weeks ago, Microsoft founder Bill Gates and 40 other billionaires pledged to donate at least half of their fortunes to philanthropy, either while still alive or after death. Is America a country so blessed with affluence that it can afford to give away billions, just like that? Gates' move could also be interpreted as a PR campaign, in a country where the super-rich sense that although they are profiting from the crisis, as was to be expected, the number of people adversely affected has grown enormously. They also sense that there is growing resentment in American society against those at the top. For people in the lower income brackets, the recovery already seems to be falling apart. Experts fear that the US economy could remain weak for many years to come. And despite the many government assistance programs, the small amount of hope they engender has yet to be felt by the general public. On the contrary, for many people things are still headed dramatically downward. In a recent cover story titled "So long, middle class," the New York Post presented its readers with "25 statistics that prove that the middle class is being systematically wiped out of existence in America." Last week, the leading online columnist Arianna Huffington issued the almost apocalyptic warning that "America is in danger of becoming a Third World country." More than a year after the official end of the recession, the overall unemployment rate remains consistently above 9.5 percent. But this is just the official figure. When adjusted to include the people who have already given up looking for work or are barely surviving on the few hundred dollars they earn with a part-time job and are using up their savings, the real unemployment figure jumps to more than 17 percent. In its current annual report, the US Department of Agriculture notes that "food insecurity" is on the rise, and that 50 million Americans couldn't afford to buy enough food to stay healthy at some point last year. One in eight American adults and one in four children now survive on government food stamps. These are unbelievable numbers for the world's richest nation. Even more unsettling is the fact that America, which has always been characterized by its unshakable belief in the American Dream, and in the conviction that anyone, even those at the very bottom, can rise to the top, is beginning to lose its famous optimism. According to recent figures, a significant minority of US citizens now believe that their children will be worse off than they are. Many Americans are beginning to realize that for them, the American Dream has been more of a nightmare of late. They face a bitter reality of fewer and fewer jobs, decades of stagnating wages and dramatic increases in inequality. Only in recent months, as the economy has grown but jobs have not returned, as profits have returned but poverty figures have risen by the week, the country seems to have recognized that it is struggling with a deep-seated, structural crisis that has been building for years. As the Washington Post writes, the financial crisis was merely the final turning - for the worse. Bill Bonner for The Daily Reckoning Australia Similar Posts: Actor's Life is Misery: Giving Up on London and Going to L.A. Something to Work With The Empty Nest Stage: Henry is Going to the University of Virginia Governor Mark Sanford Betrays Love Thomas Malthus and the Global Food Crisis

Ex-Fed Governor Mishkin Caught in 'Pay for Say' Over Icelandic Economy Posted: 22 Aug 2010 11:58 AM PDT

Investor Sentiment: Heading In The Right Direction Posted: 22 Aug 2010 11:35 AM PDT Insiders are buying, and the "dumb money" indicator is neutral but nearly becoming more bearish. Another week of downside pressure will likely set up another buying opportunity in the near future as lower prices will bring out the bears. Read More...

Shale Gas E&P Players: Challenges Appear to be Nearing an End Posted: 22 Aug 2010 11:33 AM PDT Alan Brochstein, CFA submits: It was about a year ago that I became concerned that investors had become a bit too optimistic about natural gas companies leveraged to shale. The thesis was that the supply dynamics were so impressive that the reduction in drilling in conventional formations would be overwhelmed by this new production. Initially, forward gas prices were extremely high relative to spot prices, which was enabling companies to hedge and produce profitably. I have subsequently reviewed the transcripts of many of the significant players on a quarterly basis and shared summaries on my blog. For those interested in prior reviews: Natural Gas Outlook Still Smells (5/15/10) Profitless Prosperity Ahead (2/13/10) Time to Bail on Shale (11/22/09) Natural Gas: Extreme Contango (9/5/09) At this time, the thesis has probably played out fairly fully. As I noted last quarter, many of the companies that were optimistic about gas have changed their focus to oil and gas liquids. Further, as I will describe below, production bottlenecks have started to have a big impact for some companies. While NYMEX forward prices still remain at a premium to near-term prices, the percentage and dollar difference compared to a year ago have declined dramatically. When I described "extreme contango" a year ago, front-month gas was a very depressed 2.75, while the one-year future price was above $5. As of 8/20, near-term gas on teh NYMEX closed just above $4, while the September 2011 future closed at 4.78. Importantly, it is no longer possible to lock in forward gas prices at 5-7 any longer. Complete Story »

At £4.8 Trillion In Total Debt Including Unfunded Liabilities, UK Debt Is Six Times More Than The Official Number Posted: 22 Aug 2010 10:40 AM PDT Everyone knows that the total US debt is over $120 trillion when accounting for such underfunded liabilities as Medicare and Social Security. Well, it appears that the bankrupt US welfare state is not alone. According to the UK's Institute of Economic Affairs (IEA), the country's national debt is &ound;4.8 trillion once state and public sector pension liabilities are included, or &ound;78,000 for every person in the UK. This number translates to about 330% of UK's GDP. Which of course is nothing compared to the total US adjusted debt-to-GDP number which when accounting for all off balance sheet items is roughly 10x the US GDP of $13.6 trillion, a number which is Rosenberg and Bridgewater are correct, may decline quite soon. The Telegraph has more: The IEA raised its concerns after the latest public finances data from the Office for National Statistics (ONS) this week, which showed that the total debt, excluding bank bail-outs, is &ound;816bn – itself a record high. However, the figures strip out the state's pension liabilities in a contravention of standard accounting practices. Mark Littlewood, the IEA's director-general, said: "The latest official national debt figure is seriously misleading. Looming in the background are pension liabilities. These should be moved to the forefront. "The ONS should include these liabilities in their calculations. It is shocking enough to see official figures revealing a jump in national debt over the last year from the equivalent of 48pc of GDP to 56pc, but the grave reality is that our real national debt stands at 333pc of GDP." Nick Silver, an IEA research fellow, said the full figure, including the &ound;1.2 trillion public sector pension liability and &ound;2.7 trillion state pension liability, should be published either monthly or annually alongside the net debt data for reasons of transparency. The ONS has already begun to assemble the data, publishing the full list of Britain's debts and liabilities for the first time in July, which came to a total of between &ound;3.68 trillion and &ound;4.84 trillion. The ONS numbers included a &ound;1 trillion to &ound;1.5 trillion liability for the Government's stakes in the part-nationalised banks, equivalent to the relevant portion of their total liabilities, &ound;1.35 trillion for state pension liabilities, and &ound;1.2 trillion for public sector pensions. At this point these statistics are just that- there is no hope any of these will ever be paid down. And with government spending soon to focus ever more on such things as paying down interest, instead of investing in what could truly push the economy to a new level such as R&D spending and incubating basic research at scholar centers, the world will continue to dig itself into an ever greater Ponzi hole until the massive debt load is no longer sustainable.

Focus on Investing Basics in a Choppy Market Posted: 22 Aug 2010 10:25 AM PDT David Zanoni submits: With the stock market in a long-term consolidation phase, chopping up & down, but actually going sideways this past decade, frustrated investors are perplexed as to where to put their money. I think that it is time to take a break from trading and focus on long-term asset allocation based on your age. Is the stock market ready for another crash? Are bonds in a bubble that is ready to burst? Are we about to experience inflation or deflation? Don't worry about any of those issues and just stay focused on long-term retirement planning. If the daily flucuations in the stock market drive you crazy - then stop watching it daily. Stocks historically gain an average of 11% per year and that includes bear markets (click on chart to enlarge). Complete Story »

The Complete Q2 Hedge Fund Holdings Update (In Which We Discover That 181 HFs Hold Apple Stock) Posted: 22 Aug 2010 09:47 AM PDT The quarterly Goldman Hedge Fund Trend Monitor, aka the HF groupthink update, is released, chock full of HF holding trivia, such as that should Apple ever miss its priced to absolute perfection business model, a whopping 181 hedge funds are going to suffer, and 75 HFs, who have Apple as a top 10 holding, are going to get crushed. Also, we uncover the latest top 10 hedge funds ranked by equity assets (DE Shaw, RenTec and Paulson are the new top 3, although with 2,048 and 2,669 holdings for the first two, they are now receiving 2 and 20 for their quant models which as the NYT highlighted recently no longer work). On the other end of the quant spectrum, are the traditional hedge funds, and as of Q2, the typical fund had an average of 63% of its long-equity assets invested in its 10 largest positions, compared to 30% for a typical large-cap mutual fund, 17% for a small-cap mutual fund, 19% for the S&P and just 2% for the Russell 2000. The top 5 most concentrated hedge fund holdings are AutoNation (46% of market cap held by HFs), Sears (45%), AutoZone (32%), Pactiv (28%) and Novell (27%). Also hilarious perpetual LBO candidate Radioshack has hedge funds make up 24% of its market cap. In other words, any bad news here will kill the stock price faster than a HFT can frontrun the exponential pulling of bids. On the other side, or the names most hated by hedge funds, is Brown Forman, where only 0.2% of HFs make up its market cap, followed by Roper Industries, Stericycle, Hormel, and Praxair. From a surprise upside potential perspective, Goldman estimates that the most HF-shorted names is Crown Media, which has a 99 day short interest ratiom followed by Lifeway Foods, Isramco, K-Fed Bancorp, First South Bancorp, and Costar Group. Shorts Squeezes in these names could be violent. Looking at ETFs, the biggest gross long ETF held by HFs is GLD with $8 billion in long ownership, while the most shorted is SPY with $27.6 billion in shorts, indicating that funds are now "hedging" using this proxy for the entire market. Lastly, in confirmation that hedge funds are for the most part worthless "groupthink" contraptions which merely ride a leveraged beta wave, and suck out management fees, Goldman highlights that the "Most Concentrated" basket of stocks has underperformed the "Least Concentrated" stocks materially since February 2007, confirming that HFs have actually destroyed value in both the past 3 years and YTD, by underperforming the market. The key findings of the Q2 report update: Hedge funds’ net weighting in Consumer Discretionary remains the highest of all sectors at 17% followed by Information Technology. Hedge Funds increased their Materials exposure during 2Q 2010 and remained most underweight Consumer Staples and Financials. Hedge funds have the most positive directional view on Telecom Services given the 65% net long positioning when we combine long and short exposures. Hedge funds appear to hold a 10% net weighting in Materials and are more overweight relative to the Russell 3000 than long exposure alone suggests. Similar portfolio skew occurs in underweights of the Financials and Consumer Staples sectors. The typical hedge fund allocates 37% of its assets to stocks with less than $2 billion in equity capitalization and 33% to large–caps ($10+ billion). Mid-cap stocks ($2-$10 billion) account for 31% of the average fund’s portfolio. On an aggregate asset basis, hedge funds allocate just 22% of their assets to small-cap stocks, while 43% is allocated to largecap stocks. The difference between the average and the aggregate suggests that the hedge funds with the largest assets under management target large-cap stocks. Goldman's way of playing the HF hotel game is by creating the "Hedge Fund VIP list", which is characterized as follows: The hedge fund VIP list (Bloomberg: GSTHHVIP) consists of stocks in which fundamentally-driven hedge funds have a large stake. We define stocks that “matter most” to hedge funds as the positions that appear most frequently among the top ten holdings within hedge fund portfolios. For this analysis, we limit our hedge fund universe to those funds with 10 to 200 distinct equity positions in an attempt to isolate fundamentally-driven investors from quantitative funds or funds that mirror private equity investments. Our hedge fund VIP list offers investment ideas and tracks long exposure of hedge funds. By construction, the VIP list identifies the 50 stocks whose  performance will largely influence the long side of many fundamentally driven hedge funds. The VIP basket lagged the S&P 500 by 1,147 bp during 4Q 2008 (-41% vs. -30%). Since then, the VIP basket performance has reversed, outperforming the S&P 500 by 1,575 bp (41% vs. 26%). Turnover for the basket during 2Q 2010 was in line with the historical average, with 15 new stocks entering the VIP list compared with a quarterly turnover of 16 stocks since 2001. From an implementation standpoint, the hedge fund VIP list offers an efficient vehicle for investors seeking to “follow the smart money” based on 13-F filings. The VIP basket has a large-cap bias with a median market capitalization of $39 billion compared with $9 billion for the S&P 500. The VIP list contains stocks from eight of the ten sectors, with Telecommunication Services and Utilities absent. The VIP basket overweights the Information Technology sector (34%) and underweights Consumer Staples (4%). The basket of the 50 stocks that “matter most” has outperformed the S&P 500 by 71 bp on a quarterly basis since 2001, with a Sharpe ratio of 0.26. As illustrated in Exhibit 3, the VIP list underperformed the S&P 500 during 2Q 2010 by 268 bp (-14.1% vs. -11.4%). Since then, the VIP list has outperformed the S&P 500 by 247 bp (8.8% vs. 6.3%). Yet possibly the most relevant chart in the Goldman report, is the following which demonstrates that the "Least Concentrated" holdings basket has outperformed the "Most hedge fund Concentrated" stocks massively since February 2007. More on this topic: We define “concentration” as the share of market capitalization owned in aggregate by hedge funds. The strategy of buying the 20 most concentrated stocks has a strong track record over more than eight years. Since 2001, the strategy has outperformed the market by an average of 312 bp per quarter (not annualized). The back test suggests that this strategy works in an upward trending market but tends to perform poorly during choppy or flat markets. The stocks in the basket tend to be mid-caps (at the lower end of the S&P 500 capitalization distribution), which have outperformed large-caps from 2004 to 2007, contributing to the attractive back-test results. The baskets are not sector neutral versus the S&P 500. The stocks with the “most concentrated” hedge fund ownership have outperformed the S&P 500 in 2010 ytd by 191 bp (+1.1% vs. -0.8%). The  “most concentrated” stocks underperformed steadily for most of 2007 and 2008, but significantly outperformed in 2009. Our “most concentrated” basket outperformed the S&P 500 by 237 bp in 1Q 2010 (+7.7% vs. +5.4%) but lagged by 303 bp in 2Q 2010 (-14.5% vs. -11.4%). Our “least concentrated” basket has outperformed the S&P 500 in 2010 ytd by 693 bp (+6.1% vs. -0.8%). The “least concentrated” basket outpaced the market by 50 bp in 1Q 2010 (+5.9% vs. +5.4%) and by 440 bp in 2Q (-7.0% vs. -11.4%).   In other words, investors who believe the Fed will ultimately fail in creating an environment in which a simple levered beta strategy will succeed, should short the Most Concentrated stocks, and go long a Least Concentrated basket. These are as follows: Yet looking at just the long side would provide an incomplete pictures, which is why Goldman also looks at net estimated hedge fund exposure, accounting for short  positions. We combined $593 billion of single-stock and ETF long holdings in 13-F filings of 612 hedge funds with our estimate of hedge fund short positions (based on $434 billion in single-stock, ETF and market index short interest positions filed with exchanges). We estimate hedge funds accounted for 85% of total short interest positions, or $369 billion as of June 30, 2010. Our analysis suggests the typical hedge fund operates 38% net long, down from 43% in 1Q 2010 and 42% at year-end 2009. Part of the short positioning is conducted at the market level via ETFs. Short positions offer more comprehensive insight to hedge fund sector tilts. Our analysis of short interest data suggests that hedge fund sector net exposure may differ from what 13-F filings indicate. During prior quarters, short interest data suggested that hedge funds used allocation differences between long and short portfolios to “hedge” their long exposure. So far in 2010, large allocation differences further skew sector positioning relative to the Russell 3000. Hedge fund long exposure shows funds are overweight Materials relative to the Russell 3000 (6.6% versus 4.0%). Short interest data indicates Materials accounts for 4.5% of all short positions. Combining long and short data, hedge funds appear to hold a 10.1% net weighting in Materials and are more overweight relative to the Russell 3000 than long exposure suggests. Similar portfolio skew occurs in underweights of the Financials and Consumer Staples sectors. Hedge Funds remained underweight Consumer Staples and Financials and increased Materials exposure during 2Q 2010. Hedge funds’ net long weighting in Consumer Discretionary remains the highest of all sectors. Hedge funds appear to underweight Information Technology for the third consecutive quarter (16% vs. 19% in the Russell 3000). Hedge funds were last underweight Information Technology in 2005 although funds were neutral in 2007.   We believe hedge funds account for the vast majority of short positions. The steady growth of shorts in the US equity market during the past eight years has accompanied the rise in hedge fund assets (Exhibits 10 & 11). We estimate that hedge funds account for 85% of all short positions. In the future, mutual funds may become a larger share of the short market, given initiatives such as 130/30 programs. Short interest for the S&P 500 declined over the second half of 2009. Currently, 2.2% of equity cap is held short while the short interest ratio has increased slightly since reaching a 10-year low late last year. We construct a “typical” long/short hedge fund portfolio. Combining our hedge fund long and short data, we constructed two 50-stock equal-weighted  portfolios (one long and one short) in an attempt to replicate a “typical” hedge fund (Exhibits 12 and 13). We acknowledge certain limitations to our hedge fund short position analysis. There is time delay, as short interest is filed bi-weekly with the exchanges and released with a 10-day delay. The short interest information we have represents positions reported by US broker/dealers. Broker/dealers incorporated outside the US do not have to report their positions. Swaps and other derivatives are also not captured in this analysis. Using statistical inference and estimates, Goldman has constructed what is a most probable gross long and short portfolio, indicative of prevailing hedge fund groupthink. Estimated long positions: Estimated Short  positions: In terms of purchasing trends during Q2, the biggest shift was in holdings of Consumer Discretionary stocks, which declined by 99bps from Q1, yet which still remains the second most overweight sector vs benchmark, next only to Materials. The sector most added to was IT, which saw a 130 bps increase in HF holdings during Q2.The most despised sectors by Hedge Funds continue to be Consumer Staples, Financials and Utilities. Allocation to Materials rose by 10 bp to 6.9% in 2Q and Materials is now the most overweight sector relative to the Russell 3000 (7% vs. 4%). During 2Q 2010 hedge funds reduced their long exposure to Consumer Discretionary by 99 bp to 14.1%. Exposure to Consumer Discretionary, previously the most overweight sector, fell by 99 bp. Hedge funds are currently 287 bp overweight Consumer Discretionary and 641 bp underweight Consumer Staples relative to sector weights in the Russell 3000. We recognize hedge funds do not manage assets based on a benchmark, but understanding and interpreting sector tilts requires an orientation to some index. Information Technology and Telecom Services represented the largest increases in hedge funds’ long asset allocation during 2Q (130 bp and 49 bp respectively). Hedge funds decreased exposure to Consumer Discretionary and Financials. Utilities and Telecom Services outperformed the market in 2Q, accounting for some of the higher weighting in portfolios. However, Materials and Info Tech underperformed during the quarter suggesting hedge funds bought shares. Changes in mutual fund sector allocation were most differentiated from hedge funds in Consumer Staples, Health Care, and Materials. Mutual funds increased exposure to Consumer Staples and Health Care during the quarter and lowered exposure to Materials. Hedge funds decreased exposure to Consumer Staples and Health Care, and increased long asset allocation to Materials.   Sub-sectors: What hedge funds are buying and selling We estimate the dollars invested by hedge funds in various sub-sectors based on change in ownership during the quarter. Sub-sectors in which hedge funds added to positions slightly outperformed sub-sectors in which they sold during 2Q (-14% vs. -15%). Funds added to positions in Industrials sub-sectors such as Building Products, Security & Alarm Services, and Trucking. The sub-sector with highest outflows was also in Industrials, Heavy Electrical Equipment (Exhibit 15). It also appears that size is starting to matter less to hedge funds, with 43% of assets invested in stocks with stocks with market cap higher than $10 billion, down from 47% as of Q1, yet in line with Q2 2009 exposure. Based on continuing decreases in stock liquidity, Goldman estiamtes that it expects "the largest hedge funds with multiple billions of dollars in assets under management will increasingly seek investment opportunities among mid- and large-cap stocks given the difficulty of investing large amounts of capital in small-cap companies. This trend may contribute to large-cap outperformance in coming quarters." Another interesting observation by Goldman: "small funds favor small caps, large funds go for the megas." The typical hedge fund allocates 37% of its assets to stocks with less than $2 billion in equity capitalization and 33% to large cap stocks ($10+ billion). Mid-cap stocks ($2-$10 billion) account for 31% of the average fund’s portfolio (Exhibit 17). On an aggregate asset basis, hedge funds allocate just 22% of their assets to smallcap stocks, while 43% is allocated to large-caps. The difference between the average and the aggregate suggests that the hedge funds with the largest assets under management target large-cap stocks. For comparison, mutual funds invest an average of 13% of their portfolios in smallcap stocks and 59% in large-cap stocks. The mutual fund tilt is even more pronounced on an aggregate asset basis where 10% of assets are invested in small-cap stocks and 65% is in large-cap stocks. Also, when it comes to the most popular product these days, i.e. ETFs, it appears that hedge funds do not use ETFs for investing purposes at all, but merely to hedge existing exposure, and that primarily as a short hedge: Goldman estimates that the greatest gross exposure is in a short SPY position to the tune of $27.6 billion. Hedge funds appear to use ETFs more as a hedging tool than as a directional investment vehicle, based on our analysis of 13-F and short interest filings. We estimate that hedge funds hold $101 billion in gross exposure to ETFs compared with $900 billion of gross exposure to single-stocks. The $81 billion of short ETF positions accounts for 80% of the hedge fund gross ETF exposure. In contrast, single-stock short positions ($307 billion) represent 34% of hedge fund gross single-stock positions. The most shorted ETFs tend to be index hedges (representing $44 billion of the $81 short positions). Commodity-related ETFs appear to be the only ETFs that hedge funds utilize on the long side. ETFs now represent 3% of long assets, down from 6% in 1Q 2009. This is consistent with a falling correlation environment, in which stock-picking comes into focus. Yeah, we are also not sure where Goldman imagined that last bit from. Here is the ETF data in tabular form: The key summary appendix tables are the following: Stocks with most number of hedge fund investors: Stocks with biggest popularity changes in Q2 2010 Stocks with biggest HF concentration increases and decreases: Biggest hedge fund hotels by popularity band: The squeeze hunters will want to pay particular attention to this one: it shows the stocks with the highest short interest in the under and over $1 billion mkt cap segments:

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