Gold World News Flash

The True Value of Gold
Bernanke Tweaks QE Strategy: How Investors Can Keep It Simple
CEF Weekly Review: The 'Chicken Little' Market
Further Signs of an Economic Slowdown
More Monetary Policy Stimulus Cannot Correct Poor GDP Growth
Friday ETF Wrap-Up: UNG Tumbles, EWZ Soars
Intel Earnings: The Only News That Mattered
Unicredit: QE Will Have Limited Impact, Fed Is Powerless
Krugman's Solution Sounds Like Assured Destruction
2010-08-28 New Martin Borgs film about the next financial crisis - a must watch
Confirming "Dumb Money's" Resilience To The Wall Street Siren Song
Bonds: Headed to New Highs?
Bond Bubble: Fact or Fiction?
Why Investors Need to Understand the Yield Curve
“Gold Is Pale Because It Has So Many Thieves Plotting Against It”
An interesting chart development in the S&P 500
Another Round Of Federal Reserve Air Coming
A Bad Case of Economic Hypochondria?
A Closer Look At The Silver Market
James Turk: "Silver headed to $30"
The All But Forgotten Self-Governing Economy
Should the Fed Takes a Hike?
Repositioning Austrian Theory Part Deux
lets talk personal silver gold ratios.
Bubble is in dollar, bonds, not gold, Turk tells King World News
Gold and silver analysts Haynes and Arensberg join King World News
Chairman Of Joint Chiefs Of Staff Says National Debt Is Biggest Threat To National Security

Posted: 28 Aug 2010 07:24 PM PDT

Gold traded in a $5 price band in Far East and half of London trading on Friday. Then, when the Comex opened, gold traded in a $10 price band. Options expiry passed with barely a whimper. Gold's New York high was $1,243.40 spot. Volume was light. Nothing to see here, folks. Silver didn't do much on Friday either... although there was a brief spike once the London p.m. gold fix was in at 10:00 a.m. New York time. But silver's attempt to break out was firmly and thoroughly squashed by the time that Comex trading ended at 1:30 p.m. At the spike high, silver hit $19.37 spot. Volume was very light as well. Just like Thursday, the world's reserve currency hung around the 82.9 cent level before rolling over a bit into the close. Here's the 3-day dollar chart that shows how range-bound the currency has been during the last two trading days. The precious metal shares hit their low at the London p.m. gold fix, which was minutes after 10:00 a....

Bernanke Tweaks QE Strategy: How Investors Can Keep It Simple

Posted: 28 Aug 2010 07:13 PM PDT

James Byrne submits:

The market response to the last FOMC meeting left many participants scratching their heads. Heading into the meeting, institutional investors wanted a magazine check on the Fed’s Glock to see if any bullets remained. The Federal Reserve did not flinch, in my read anyway. However, the ready-fire-aim high frequency traders prevalent market we reside promptly, “sold the bugle and bought the drum.” (An old war term - when the soldiers would march into battle, they would hear the bugles off in the distance. It was prudent ammo conservation to wait until they saw the drummer to begin discharging their weapon; plus, this gave them a much better chance at hitting someone at that distance than just shooting off.) Put another way, sell the rumor, buy the fact. This Friday we heard from Fed Chairman Bernanke and the market responded with a sigh and a nice recovery short covering rally.

Complete Story »

CEF Weekly Review: The 'Chicken Little' Market

Posted: 28 Aug 2010 06:33 PM PDT

Joe Eqcome submits:

Outlook: To paraphrase Mark Twain, “While history doesn’t repeat itself, it sometimes rhymes”. This observation might be instructive in comparing the two most recent stock market cycles. (See “Financial Cartoon" here.)

While investors are virtually paralyzed with regards to the depth, breadth and direction of the current stock market cycle, they have a tendency to forget the magnitude of the “dot.com” bubble bust and the subsequent recovery.

Complete Story »

Further Signs of an Economic Slowdown

Posted: 28 Aug 2010 06:29 PM PDT

Donald Marron submits:

As expected, BEA’s second stab at GDP growth for the second quarter was even less inspiring than the first. Headline growth was a tepid 1.6%, down from the 2.4% previously reported. Consumer spending and business spending on equipment and software were actually stronger than earlier estimates, but business structures, inventories, and exports all weakened, while imports (which deduct from GDP the way BEA calculates it) grew faster than previously expected.

Last month I pointed out one, small silver lining in the original GDP report: every major category of demand had increased. That is still true in the revised data, although structures just squeaked by with a miniscule 0.01 percentage point contribution to overall growth:

Complete Story »

More Monetary Policy Stimulus Cannot Correct Poor GDP Growth

Posted: 28 Aug 2010 06:17 PM PDT

Steven Hansen submits:

Everyone and their brother will be spinning the second estimate of 2Q2010 GDP which revised growth from 2.4% annualized to 1.6%. As most know, GDP cherry picks certain expenditures and is only one metric of our economy.

GDP leaves so many important economic elements out such as existing home sales, employment and debt which major economists believe are only by-products or results of GDP. Unfortunately, these three economic elements (and a few others) drove the economy into this recession depression.

Complete Story »

Friday ETF Wrap-Up: UNG Tumbles, EWZ Soars

Posted: 28 Aug 2010 06:14 PM PDT

ETF Database submits:

After an initial sell-off, equity markets surged to finish the week sharply higher despite warnings from technology bellwether Intel and a bearish outlook from Fed Chair Ben Bernanke. The Dow jumped by 160 points, while the S&P 500 and the Nasdaq posted similarly robust gains; both finished the day up 1.7%. This jump helped to boost oil prices by more than $2/bbl, putting an end to crude’s recent skid. As equity markets regained some of their recent losses, bond markets suffered; the 10 year yield rose by 0.17% while the two year note also surged higher to finish the day yielding 0.56%.

Despite a warning from Intel (INTC) that sales will fall short of earlier forecasts, investors were reassured by the Fed’s pledge to increase its quantitative easing program and buy up long-term bonds and other assets in hopes of spurring the economy back to strong levels of growth. “Regardless of the risks of deflation, the FOMC will do all it can to ensure continuation of the economic recovery,” said Fed Chair Ben Bernanke, who added that the Fed would continue “to evaluate whether additional monetary easing would be beneficial” and would act “if it proves necessary, especially if the outlook were to deteriorate significantly.”

Complete Story »

Intel Earnings: The Only News That Mattered

Posted: 28 Aug 2010 06:09 PM PDT

The Pragmatic Capitalist submits:

Bernanke is out of bullets. Anyone who can’t see that by now is not familiar with the Japanese history of QE or the most recent impacts of QE (Ben clearly didn’t save the economy with QE1 or we wouldn’t even be having this discussion). He says he will cut interest on reserves or alter the language in his speeches – total non-events in my opinion. They might get the market all excited for a few hours, but soon people will realize that none of these actions will actually fix the recession on Main Street.

Aside from all the jawboning out of the Fed, there was some actual market moving news Friday. Intel cut its Q3 earnings. According to the AP:

Complete Story »

Unicredit: QE Will Have Limited Impact, Fed Is Powerless

Posted: 28 Aug 2010 06:08 PM PDT

The Pragmatic Capitalist submits:

Apparently I am not the only one who believes quantitative easing is a “non-event”. In a recent note UniCredit analysts describe why they believe the Fed is out of bullets and will have little to no impact on markets. with its “creative” new forms of monetary policy:

There are, however, two factors that suggest the yield effect will be smaller than calculated. When the US central bank began with the first round of the quantitative/credit easing in autumn 2008, the financial markets were still in panic mode. In the wake of the collapse of Lehman Brothers and the escalating economic crisis, a complete collapse of the financial markets even appeared to be a distinct possibility. The risk premiums for all asset classes were correspondingly high at the time – also for Treasuries. Thanks to its resolute intervention, the Fed was able to restore a certain degree of basic confidence on the market. The probability of a collapse was averted, and the risk premium fell dramatically. Today, in contrast, the risk premium is already very low. The possible yield effect of additional quantitative easing would, therefore,come exclusively via the higher demand for Treasuries (portfolio balance effect). The second factor that suggests yields would fell less strongly than suggested by the NY Fed model is the law of diminishing returns: The more Treasury securities the US central bank already holds, the lower the effect of further purchases becomes. Net for net, we therefore assume that even a massive additional program for the purchase of Treasury securities totaling one trillion USD would lower the yield level by only approximately 25 basis points.

Complete Story »

Krugman's Solution Sounds Like Assured Destruction

Posted: 28 Aug 2010 06:01 PM PDT

Bruce Krasting submits:

Interesting read by Krugman in the Times Friday. He makes the clear case for some quarters of negative growth in the future, but his view is that a double dip is irrelevant. I agree with him.

While it may be hard to forecast a double dip it is now a slam-dunk that we are going into a longer period of sub par growth. That outlook is even worse than two quarters of negative growth followed by six quarters of anemic recovery. If we go two years with growth around 1% our fiscal books will be in the tank. We would be so far off on the critical issues of total debt, debt service to GDP, debt to GDP, deficit to GDP, employment and unemployment that I can’t envision how we could dig ourselves out of that hole. If we don’t grow we die.

Complete Story »

2010-08-28 New Martin Borgs film about the next financial crisis - a must watch

Posted: 28 Aug 2010 05:54 PM PDT

The new film by Martin Borgs "Overdose - The Next Financial Crisis" can now be viewed online. Watch "Overdose - The Next Financial Crisis" here.

Confirming "Dumb Money's" Resilience To The Wall Street Siren Song

Posted: 28 Aug 2010 05:54 PM PDT

When Zero Hedge first admonished our readers in June of 2009 to stay away from markets in light of a general deterioration in market structure, which included a regulator-authorized form of structural frontrunning in the form Flash trading (not to be confused with the imminently following Flash crash), an unprecedented mismatch between stock valuations and economic reality, and Wall Street continued attempts to reflate the ponzi merely for the sake of proving that it can be done, we never expected that retail would take to our warning with the ensuing solemnity. Yet with 16 consecutive outflows from domestic equity mutual funds, shut downs by legendary hedge fund managers such as Druckenmiller and Pellegrini (and many more Tiger derivative blows up to be disclosed soon, once the full extent of the carnage of the flattening of the steepener bandwagon trade is fully appreciated), virtually everyone is asking themselves how did Wall Street not only get it all so wrong, but how on earth is the primary business of the post-facelift Wall Street, which is no longer investment banking, but merely trading (with or without flow-facilitated prop frontrunning) going to sustain the recent record headcount levels (hint: it won't, and many more banks will soon let go thousands of additional staffers as key revenue sources have now disappeared forever), and most importantly, why is this time different? Why did the "dumb money" for the first time ever, not bite on the Wall Street siren song lure of an economic "rebound", but instead has hunkered down, proving that not only is Wall Street nothing more than a pure-play enabler of the ponzi regime's status quo, but that all those who were warning that the economy is far more dire than Wall Street represents, were proven right. These same individuals (and bloggers), first validated in predicting the downward direction of the economy, will see their pessimistic forecasts about stocks validated next. Yet while that happens, all those who still somehow find this a surprising development, are now left proposing hypothesis as to what went wrong. Such as the following piece by the Financial Times.

Deep into the dog days of August, a rather unpleasant scenario is unfolding among the ranks of professional investors on Wall Street.

Against the backdrop of unusually low equity trading volumes, even for a typically sleepy August, continued strong flows out of equities into bonds, and high-profile hedge funds shutting down, a bitter truth is dawning for investment professionals.

Namely, that the ranks of retail investors, commonly derided as “dumb money” by the Street, have made the right call on US equity and bond markets in 2010.

As recently as July, much of Wall Street was awash with bullish research notes for the second half of 2010 calling for higher stocks and warning about low government bond yields.

Such bullish research is a staple of the industry and, flush with their bonuses from 2009, the Street simply thought the massive stimulus from the Federal Reserve and US government would translate into a sustainable recovery this year.

But since the eruption of the financial crisis in 2008, retail investors, like Odysseus, have stuffed their ears with wax so as to silence the allure of such sirens.

Like Odysseus, the successful return to the Ithaca of market efficiency (i.e., the purging of Wall Street's siren songs of capital destruction), will ultimately require continued resistance to the temptation of a relapse into the Ponzi. Yet we are rather confident that having gone far beyond merely a contrarian indicator, the recent divergence of fund flows out of equities and into money markets (to a small extent, and a 180 degree shift from patterns established earlier in the year), but mostly in fixed income, the case is now that with the demographic shift accelerating to the point where few if any are hoping for "double baggers" (and are willing to allocate capital to trades which have worse odds than playing blackjack in Las Vegas), the attempt to front run the dumb money has failed. What this means is that the proverbial bagholder is now Wall Street itself, namely the various prop trading desks, and assorted HFT non-overnight holding strategies (and yes, there are thousands of these). Thus instead of slowly, calmly and methodically selling to the last money in, Wall Street is now stuck in a Catch 22 of how much higher beyond fair value can the "Pig Farmers" (as defined by David Rosenberg) push stocks, before defection becomes the normative game theory mode, and the market crashes to unseen before levels, especially since prevalent short selling levels are now at near record lows, eliminating the natural buffer to a downside acceleration.

More from the FT:

Beyond the two big equity bear markets of the past decade, it’s no surprise that Main Street has soured on equities thanks to the Madoff scandal and the bail-out of Wall Street banks, followed by high bonuses paid out to bankers last year, all crowned by May’s “flash crash”.

While retail investors ran from equities and piled record amounts of their cash into money market funds in 2008, what really hurts the Street is their failure to forget and come back.

The common punchline on Wall Street is that once the markets have rallied for a while, you wait for the “dumb money” to rush in for a slice of the action. Then the “smart money” sells out and sit backs as retail investors get hosed when the market falters.

Except this year, the dumb money has resolutely stayed away and kept buying bonds and foreign equities, leaving the professionals twisting in the wind. So far in 2010, $50.2bn has been pulled from US equity funds on top of the $74.6bn in outflows during 2009, while $152bn has flooded into US bond funds, according to EPFR Global.

Such flows aptly illustrate Wall Street’s sour mood. Talk to people in prime brokerage at big banks and they mutter darkly that many hedge funds are struggling to make money and risk big redemptions later this year. The recent decision by Stanley Druckenmiller to wind down his Duquesne hedge fund is the type of shot across the bow that people in the industry could well look back upon as a foreboding omen.

Of course, this is verbatim what we have been warning about for months and months and months. And just as we have warned about the economy tanking, which is now confirmed by even the biggest permabulls on Wall Street (and we note with a deliberate dose of gloating the even Morgan Stanley's "economists" have now stepped away from the Kool Aid punchbowl to their unquantifiable chagrin...and derision), the next leg down is stocks themselves, first as multiples collapse, and second, as all those corporate decisions to conserve cash (absent a few idiotic decisions by corp fin department ostensibly populated by crystal meth snorting monkeys such as those of HP and Dell), are finally seen for what they have been all along - prudent capital management in light of the next major downleg in the economy (and, yes, a major rise in corporation taxation) seen all too clearly by corporate Treasurers and CFOs, are all effectuated.

As for the winner out of this?

For many on Wall Street, the pain has been minimal, which perhaps underpins their usually bullish take on stocks and why they think the economy is currently experiencing a soft patch. The reality for Main Street, however, has been and remains a lot harsher. Unless the economy starts picking up speed, housing stabilises and unemployment abates, Wall Street stands to learn that the “dumb money” has a much better handle on the outlook for the economy and stocks.

The dumb money also knows one other thing - that the Fed has now run out of all options to restimulate the economy (and prepare for the Fed's escalating appeal of the Pittman decision to the Supreme Court in the week before mid-term elections to take on a very contentious gravity from a political angle), absent for the nuclear option. That option, as Bernanke knows all too well, will do nothing to reflate leverage-heavy assets, and will merely shoot critical commodities like wheat, oil, cocoa (as recently demonstrated by deranged speculation) into the stratosphere, finally ending the lie of the Core-CPI "disinflation." Wall Street has yet to realize just how ahead of it the "dumb money" finally is - we have long said that Americans, especially those of financial decision-making relevance, are nowhere near as dumb as Wall Street would like to believe, and they just need the right pointers now and then.

Zero Hedge will continue to provide such "pointers", and will be more than happy to read additional validation as this particular FT article, which also confirms that unlike even moderately wise people, who are all too aware that they know nothing at all, Wall Street, being at the other end of this spectrum, believes it knows everything, when the reality is precisely the opposite. And now that the majority has finally been awakened to Wall Street's simplistic ploy to control capital markets, and the general economy, with nothing else up its sleeve than a confidence game, it will be time to finally pay for decades of outright lies to those whose interests Wall Street should have held in highest regard all these years.

Bonds: Headed to New Highs?

Posted: 28 Aug 2010 05:39 PM PDT

Jeff Pierce submits:

It seems that the action in bonds over the past week tells me that they want to pause before heading off to new highs. I’m sure many out there will say that the bond bubble has burst and that they’re toast. As of right now I tend to think this is just a little blip and TLT will see much higher prices in the future. By watching the RSI levels (80-40) we’ll get a good idea if this is just a pullback by watching how the chart (click to enlarge) reacts around the 40-50 level. If it’s going to remain strong it should bounce right off those levels and it may not get that low as dip buyers will be waiting at those levels. I’ll be watching the 20 ema (blue arrow) for first signs of support and that could be the area where were bounce as well.

The only concern that this chart has is the amount of volume on the selling days which normally indicates distribution. However, the strength this chart has shown this year has me convinced we’re going to see '08 highs at a minimum, and potentially a real bubble with a move into the 150+ area and beyond before the ”bond bubble” pops.

Complete Story »

Bond Bubble: Fact or Fiction?

Posted: 28 Aug 2010 05:35 PM PDT

Annaly Salvos submits:

The “bond bubble” discussion in the mainstream media has become deafening lately. Some of the commentary has been thoughtful and interesting, but not all of it. Much of the bubble-watch has focused on asset flows into fixed income funds, the total return of Treasuries over the last 10 years, and the theoretical possibility of a bubble in an asset class that guarantees return of principal.

Asset class inflows or high total returns can be symptomatic of a bubble, but a true bubble must be characterized by extreme overvaluation. Beyond pointing to a nominally low yield, the discussion of Treasury valuation has been lacking. Certainly the Siegel/Schwartz WSJ editorial comparing 10-year TIPS to tech stocks valued at 100x earnings is not a realistic comparison. Treasuries aren’t valued on a P/E basis; Investors buy Treasuries to earn risk-free income. In the short run, Treasury yields are driven by the usual suspects: fear and greed. But in the long run, the biggest influence on yields is anticipated inflation. Investors demand a certain return, after inflation, for risk-free investments. The chart below (click to enlarge) plots the 10-year Treasury yield against the year-over-year change in core inflation.

Complete Story »

Why Investors Need to Understand the Yield Curve

Posted: 28 Aug 2010 05:34 PM PDT

George Fisher submits:

“An investment in knowledge always pays the best interest” - Benjamin Franklin

Why should equity investor care about the bond yield curve? It’s simple. All investors should keep one eye on the bond yield curve because the curve will help foretell the future. A bit more accurate than the mechanical fortune teller at Coney Island, an inverted or flat yield curve has been an excellent leading indicator of recessions. One of the basic concepts of reviewing the yield curve is the understanding that virtually every recession is preceded by a flat or inverted yield curve.

Complete Story »

“Gold Is Pale Because It Has So Many Thieves Plotting Against It”

Posted: 28 Aug 2010 05:00 PM PDT

An interesting chart development in the S&P 500

Posted: 28 Aug 2010 02:57 PM PDT

I have been mentioning in recent pieces my opinion that Wednesday’s bounce off the S&P 1040 S/R level marked an interim cycle low and that risk would be bid in the near term. Using that assumption, an interesting pattern is developing in the chart of SPY/S&P 500.

I have written about the impending head & shoulders development in the charts on multiple occasions already, with January highs marking the left shoulder, April highs the head, and recent highs this month the right shoulder. The neckline around SPY 102 suggests a breakdown to about SPY 84-86, if the traditional head & shoulders target calculation is used.

However, another pattern is developing that is implying a similar target zone, that is a bit less voodoo-ish than head & shoulders. If this week’s lows are taken as cycle lows in the same breadth as July lows marking their cycle’s lows, then the trendline connecting these lows seems to form the support trendline of a very large symmetrical triangle that is quickly approaching its apex.

April & August highs (the head & right shoulder) connect to form the resistance trendline of the triangle, and using the triangle’s range and projected apex/breakdown level, the target implied is around 85-85, which translates to the important S&P 875 S/R level.

Triangles are unique chart patterns because they make intuitive sense. Resistance areas are where excess supply overtakes demand and price falls, whereas support zones indicate excess demand. If both resistance and support trendlines are converging, that indicates that supply is being offered at marginally lower levels (sellers getting more aggressive) while demand is being offered at marginally higher levels (buyers getting more aggressive). This type of positioning often precedes big moves, as one of the theses (bull/bear) is proven wrong and the other side of the trade (the right side between the bulls & bears) “wins” over, with the wrong thesis being liquidated and amplifying the move. Although technical analysis gets a reputation for being little more than voodoo forecasting, some of it, like well-defined triangle patterns in the indices, have a priori basis to their theses and implications. As an example, I’ve provided the symmetrical triangle in QQQQ that “called” the massive move down during and after the fall 2008 market crash.

Before (implied target of QQQQ 27):

After (actual low of just under QQQQ 25):

I am expecting a bounce from here to test the upper bound of the triangle, which corresponds well with the overhead 200d that should also provide resistance. If SPY indeed fails to break its triangle resistance/200d, I expect that test to mark a very significant top in the market and expect the next move to be the downside, breaching the triangle’s support level, and then next the 103.50 & 102 S/R zones, taking SPY down to below 90.

In the event of a triangle breakout to the upside, I expect SPY to test June & August interim highs around SPY 113 and price action from there to determine trend; continued strength through 113 should take the market much higher, while selling at 113 and subsequent 55/200d breakdowns should mark the top and precede a big move down.

OPEN TRADES

Original piece here.

Another Round Of Federal Reserve Air Coming

Posted: 28 Aug 2010 01:12 PM PDT

(snippet)

History is being made. The American public has never been no nervous, perhaps fearful of something dreadful and imminent. The global monetary system is crumbling. The typical stimulus has failed to jumpstart the USEconomy. The 20 months of near 0% short-term official interest rate has failed to revive the moribund US housing market. The fraudulent FASB accounting rule allowance has only succeeded in delaying the demise for the big US banks, which do not lend much, but do continue to benefit from USFed liquidity facilities. Witness the failure of the US financial sector. Witness the climax chapter of failure for the Fascist Business Model. The US banker brain trust, which possesses only a modicum of economic wisdom, analytic prowess, or foresight, finds itself in a desperate corner. Their talk of an Exit Strategy in the last several months was summarily dismissed as nonsense, propaganda, and wishful thinking by the Jackass here on a consistent irrefutable basis. The US Federal Reserve is ready to embark on the second round of Quantitative Easing. The monetization of US$-based bonds of many types will be done on a second initiative, on cue. Here is the irony, the insanity, the recklessness, the tragedy. What failed, they will do again, maybe even bigger! At risk is global confidence and trust of the United States, hardly a zero cost item.

The urgency of the QE2 Launch will be made quite clear by the leaders occupying positions of power, after they digest the latest housing data. The July existing housing sales fell by 27.2% in a single month. The July new home sales fell by 12.4% in concert. Few analysts operating with USGovt service badges anticipated that the empty-headed home buyer credit of $8000 would rob forward sales and leave an autumn vacuum in home demand. It did. Check out the silver price, which touched $19 on Wednesday. And at $1240, the gold price is poised to make new highs any day. My near-term targets are $23.5 for silver and $1300 for gold. Energy prices are soft but precious metals prices are strong. Think heterogeneity!

More Here..

A Bad Case of Economic Hypochondria?

Posted: 28 Aug 2010 11:52 AM PDT

Via Pension Pulse.

Following my latest post on whether the Fed has defused the neutron bomb, a senior pension fund manager sent me a link to AXA Investment Managers' latest weekly comment by Eric Chaney, Deflation may have won a battle, but not the war.

It is an excellent read and demonstrates why any discussion on the inflation/deflation debate which doesn't take into account what's going on outside the US is missing the bigger picture. I quote the following:

Although contemporaneous estimates of output gaps are somewhat elusive, the broad picture is clear: a growing portion of the global economy is facing inflation risks and the bulk of developed economies is no longer in the deflation danger zone. This uneven dynamic distribution matters a lot for investors, who need to make up their mind about inflation. One key lesson from the past cycle is that price movements have a larger common component than in previous times; call it the globalisation factor. Matteo Ciccarelli and Benoît Mojon estimated that “(inflation rates of) OECD countries have a common factor that alone accounts for nearly 70% of their variance” (ECB working paper, October 2005), a finding that is consistent with later research by Haroon Mumtaz and Paolo Surico (Bank of England working paper, February 2008). In such a world, the fact that China, India and Brazil have entered into the inflation risk zone matters more than Spain, Ireland and Greece being on the brink of deflation.

Mr. Chaney concludes by stating:

In sum, there is no evidence that deflation has gained much ground during the summer. For sure, a double dip of the US economy would tick a few boxes in the deflation camp. Yet the most likely scenario in our view is that the US has embarked on a slow growth cycle, the mirror image of the artificially debt-fuelled previous decade, rather than on a stop-and-go cycle. Once the markets get a clearer picture of business cycle developments, which may unfortunately take several months, there are good reasons to believe that the current deflation buzz will be quickly replaced by its opposite. In the meantime, enjoy the bond rally!

There are other encouraging signs suggesting that the global recovery is back on track. This past week, the CPB Netherlands Bureau for Economic Policy Analysis released its World Trade Monitor for June 2010, showing that world trade was up 0.7% month on month after an upwardly revised 2.3% increase in May.

Why is this significant? Because, as Yanick Desnoyers, Assistant Chief Economist at the National Bank of Canada discusses below, Global trade volume finally back to its previous peak:

According to CPB Netherlands Bureau for Economic Policy Analysis, the volume of world trade grew 0.7% in June after an upwardly revised 2.3% gain in May. This represents the ninth increase in ten months. Global trade volume is now expanding at a 21.2% growth on twelve month basis, just shy of the 23% peak registered in May. In the second quarter as a whole, global volume trade was up a significant 15.3%. As today’s hot chart shows (click on char above), it took only about a year for world trade volume to virtually get back to its previous peak.

On the global industrial output side, the index is already in an expansion mode with a 0.7% gain above its previous peak, despite the fact that IP is still down 10% in advanced economies. After all, it seems that fears of sovereign debt contagion from the Euro zone earlier in the spring did not have a material impact on global trade volume. Despite an upcoming slowdown in the U.S., we are still forecasting an above 4% global GDP growth in 2010.

What this tells you is that this cycle is different than previous cycles because the Emerging economies are the source of growth. Too many analysts are focused solely on what is going on in the US and other developed economies. I too had written about Galton's fallacy and the myth of decoupling, but maybe this view needs to be revisited.

And even in the US, I tend to think there is way too much gloom & doom, a point underscored by Ross DeVol, executive director of economic research at the Milken Institute, who wrote an op-ed in the WSJ this past week, The Case for Economic Optimism:

Gloom and doom is the hallmark of the current economic debate, as the most recent congressional testimony from Federal Reserve Chairman Ben Bernanke demonstrates. Despite Mr. Bernanke's generally upbeat message on the Fed's official forecast, which calls for moderate economic growth of somewhere between 3.0% to 3.5% this year, the market and the media fixated on his acknowledgment that the outlook was "unusually uncertain." Those words have only reverberated in the past few weeks, bolstering economic pessimists.

There's a point at which pessimism becomes a self-fulfilling prophesy, scaring businesses away from investing or hiring. The dark tone of today's discourse is at risk of doing just that.

The Milken Institute's new study, "From Recession to Recovery: Analyzing America's Return to Growth" is based on extensive and dispassionate econometric analysis. It concludes that the U.S. economy remains more flexible and resilient—and has more underlying momentum—than is generally acknowledged. In fact, our projections show cause for measured optimism: A return to modest but sustainable growth is close at hand.

America's businesses are capable of navigating around policy uncertainty and the twists and turns of a volatile global economy. While slow private-sector job growth is to be expected in the early stages of a recovery, the U.S. should add 1.5 million jobs in 2010, 3.1 million in 2011, and 2.6 million in 2012. That will translate into real GDP growth of 3.3% in 2010, 3.7% in 2011, and 3.8% in 2012.

In this pessimistic climate, this forecast will likely be considered contrarian. So why is our economic outlook more sanguine than the current consensus? For one, robust (albeit moderating) economic growth in developing countries, particularly in Asia, will provide support for U.S. exports. Look no further than Caterpillar, which reported a doubling of its earnings in the second quarter of 2010 and whose product line is sold out for the rest of the year.

Improved business confidence is already spurring strong investment in equipment and software. Record-low U.S. long-term interest rates are supporting the recovery. And the benign inflationary environment allows the Fed to keep short-term interest rates near zero until late this year, or even into 2011 if it desires.

Historical context offers further reason to expect a rebound. The peak-to-trough decline in real GDP during this recession was 4.1%, making it the most severe downturn since World War II. But throughout the postwar period, the rate of economic recovery from past recessions has been proportional to the depth of the decline experienced. While this relationship has been somewhat variable, it is well-established. Our projections for GDP growth are above consensus but are substantially below a normal rate of recovery after a recession of this severity.

The naysayers are right that there's a "new normal" economy, but it's not that the potential long-term growth rate of the U.S. is substantially diminished, as they say. It's that this time, the fulfillment of pent-up demand will be subdued because consumers were living so far above their means during the bubble years. Nevertheless, consumer durables and business investment in equipment will see some previously postponed purchases finally happen—if not this year, certainly by 2011 and 2012.

What needs to happen on the policy front in order to build momentum?

In the first place, small businesses need access to more bank credit to create jobs. Banks feel conflicted by calls from the Obama administration to increase lending while regulators are instructing them to add to their reserves. Regulators need to be reminded that some risk is necessary in a market economy.

The White House also should press Congress to pass legislation modernizing Cold War–era restrictions on exports of technology products and services that are already commercially available from our allies. This would boost U.S. exports and reduce the deficit. And if the White House is serious about doubling exports by 2015, it needs to push trade deals with South Korea, Colombia and Costa Rica through Congress.

For its part, Congress must move immediately to restore the lapsed R&D tax credit. Even better, it should expand the credit and make it permanent.
Congress also should pass legislation to temporarily extend the Bush tax cuts that are set to expire at the end of this year. It's important not to remove any economic stimulus as long as the sustainability of the recovery is in question.
Another must-do: by 2012, Congress needs a credible long-term plan in place to reduce the deficit. If it doesn't, international financial markets might force our hand by demanding a higher rate of return on U.S. Treasurys.

Washington has to focus like a laser on helping businesses create jobs, while the rest of us should avoid talking ourselves out of a recovery by dwelling on the doom and gloom. The U.S. economy has already adapted to serious imbalances in record time: There's ample reason to believe in its dynamism in the months and years ahead.

While US consumers were living beyond their means, they're paying down debts fast. The amount consumers owed on their credit cards in this year's second quarter dropped to the lowest level in more than eight years as cardholders continued to pay off balances in the uncertain economy.

Moreover, the FT reports that US credit-card losses are falling faster than expected, with the six largest card issuers expected to earn nearly $10bn more in the coming 12 months than predicted, says a study by Moody's.

Historically, US credit-card write-offs have tracked the unemployment rate. But for the first time in a decade, loans considered uncollectible by lenders are falling faster than the jobless rate, prompting analysts to revise earnings models.

The divergence from past experience reflects bank efforts to weed out risky borrowers, moves by consumers to pare back debts after the excesses of the past decade and new credit card rules intended to discourage reckless lending.

“We are getting back to an old-fashioned basis of lending, providing credit only to people who have the ability to repay,” said Curt Beaudouin, an analyst at Moody’s.

Finally, while everyone is focused on weakness in the jobs and housing market, listen to Brian Wesbury of First Trust Advisors below who thinks the US economy is fine and that the country's just suffering from a case of what he calls "economic hypochondria."

Wesbury blames stimulus for delaying the recovery, which is arguable, but I think he's right on upward pressure on growth, expecting the economy to accelerate over the next year.

A Closer Look At The Silver Market

Posted: 28 Aug 2010 08:04 AM PDT

Dear Friends,

I have had a fair number of emails asking me to take a look at the internals of the silver market vis-à-vis the Commitment of Traders report after the explosive move that it underwent this past week. The big move began on Tuesday which is the cutoff day for this week's COT report so we are able to see the state of the market through that date. However, this report will not catch what transpired on Wednesday through today. If you recall, silver tacked on quite a bit more upside since its move on Tuesday.

The only thing I can note at this point is that a bit of divergence occurred between the Swap Dealers and the Commercial Producer, User class. The general pattern in silver is that these two groups of traders tend to move in tandem, increasing their net short positions as the market rallies and decreasing it as the market moves lower. It is not an exact match but fairly reliable.

This week's report does show a move by the Swap Dealers in the opposite direction of their fellow travelers. This class saw a significant amount of new buying in addition to short covering. One or even two weeks does not a trend make so it is too early to say anything definitive about it as of now but it should be noted that as of Tuesday they were net long.

Again, try not to read too much into things right now but let's monitor developments again next week.

Concerning gold – nothing out of the ordinary as far as its COT report shows – managed money piled in on the long side while the Commercial Class and the Swap Dealers loaded up on the short side once again. Managed Money remains well shy of their all time peak of more than 238,000 net longs – they are currently at 202,000. There is lots of room for the funds to play should they choose to do so.

Click chart to enlarge in PDF format

James Turk: "Silver headed to $30"

Posted: 28 Aug 2010 05:07 AM PDT

Well worth a listen.

http://www.kingworldnews.com/kingwor...ames_Turk.html

The All But Forgotten Self-Governing Economy

Posted: 28 Aug 2010 04:00 AM PDT

GDP growth revised downward to an "anemic" 1.6%…

Jobless claims rise more than forecast…

Home sales fall off a cliff…worse than economists expected…

Faced with a slew of deteriorating economic data points, Fed Chairman Ben Bernanke delivered a speech on Friday designed to assure investors that he has the fate of the nation's economy under control.

The Fed, said he, "is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly."

Come again, Mr. Bernanke? "Deteriorate significantly"? What happened to the recovery? What happened to the "substantial progress" you had so earnestly forecast at last year's annual Federal Reserve retreat?

On that very occasion, a year ago to the day, Bernanke spoke thus to the committee:

"Although we have avoided the worst, difficult challenges still lie ahead. We must work together to build on the gains already made to secure a sustained economic recovery…and prevent a recurrence of the events of the past two years.

"I hope and expect that, when we meet here a year from now, we will be able to claim substantial progress."

The inability of Mr. Bernanke – or anyone else for that matter – to hold back the tide of necessary correction ought to be obvious to all.

The study of economics wasn't always the bottomless well of embarrassment it has come to be. There was a time when moral philosophers – as those of the trade were once known – spent their days pondering things of actual importance. They listened to the market murmurs of the day, instead of forecasting the unknowable events of tomorrow…they observed rather than tinkered…and asked questions instead of falsifying answers.

How ought members of a society allocate limited supply in an environment of unlimited demand? Is there a fair and equitable way to achieve such a goal? What controls, if any, should be employed to govern the process? Etc., etc., etc…

Although economics is itself an imperfect science, a "soft science," as some assert, the perfect laws of science nevertheless bind it. Quantitative easing, for instance, is and always will be a bogus theory, a monetary mallet made of liquid, unable to bend anything into shape and forever doomed to flooding the system. Borrowing from one pocket to finance the other is a mug's game; just as increasing the supply of money in a closed system must necessarily devalue all pre-existing units by a commensurate measure. Put another way, two plus two is never equal to five…never mind what the modern economist has to say on the matter.

Similarly, one can be reasonably certain that there are only two ways in which an economy, and indeed an entire society, is capable of governing itself. The first is by force; the second by means of voluntary cooperation. That both are mutually exclusive should be self-evident. One cannot be partly violated any more than they can be a little bit pregnant. The concept is oxymoronic, as well as ordinarily moronic. The idea is akin to that of a "voluntary tax." Obviously, no such thing truly exists. It is a donation or it is an act of theft. Plain and simple.

Now wait just a moment, we hear some say. What about the rule of the majority? After all, we can't very well wait around for everyone to agree on everything all the time. That may be true. But, to paraphrase an old adage, the road to ruin is paved with the whims of political expediency. A system built on a foundation of coercion is sentenced to failure, whether by invasion from without or revolution from within.

For its part, the voting process only serves to muddy the waters. Democracy, as Winston Churchill once observed, is the worst form of government…except for all those others that have previously been tried. Even if 99% of the people vote for some kind of sales tax, for instance, a full and very important 1% are still subject to what essentially becomes legalized theft.

When considering that such an overwhelming consensus is so seldom reached in today's political arena (consider both Britain and Australia's recently hung parliaments), it is little wonder politicians rank marginally below economists on popular opinion polls. What is incredible, however, is the fact that so many people are content to simply cast their vote and to take the consequences on the chin, believing all along that they were a vital part of the process and that one must take the good along with the bad, and even the ugly.

It was perhaps David Hume who expressed it best when, in his monumental First Principles of Government, he wrote, "Nothing appears more surprising to those who consider affairs with a philosophical eye, than the ease with which the many are governed by the few."

Self government, through individual and collective acts of voluntary cooperation, therefore, seems to be the only philosophically consistent, defensible form of government available to man. The state, with its various forms of coercion, shrouded in the cloak of good intention and peddled by forecast-mongering central bankers, be damned.

Joel Bowman
for The Daily Reckoning

The All But Forgotten Self-Governing Economy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

Should the Fed Takes a Hike?

Posted: 28 Aug 2010 03:30 AM PDT

Considering that the weather forecast is for thunderstorms today and tomorrow in Jackson Hole, Wyoming and, aside from when it comes to operating a printing press, economists are not known as risk takers, the attendees of this year's Federal Reserve confab may be inclined to avoid braving the elements, a decision that could result in more work than play.

It's not clear whether that would be a particularly good thing or not as some (such as host Thomas Hoenig of the Kansas City Fed) now feel that the Fed might be doing more harm than good for the U.S. economy. The latest developments on the central bank's group therapy session about 150 miles south of here are provided by the Wall Street Journal.

Economists still put low odds on the economy falling back into recession, but they acknowledge that the likelihood has been rising. Double-dip recessions are rare in history, sometimes the result of policy mistakes—such as pulling back stimulus too quickly or aggressively, as happened in the U.S. in the 1930s and in Japan in the 1980s. The most recent case of an economic relapse in the U.S. was the 1981-82 recession, which followed the 1980 downturn.
…
Mr. Bernanke's speech signaled that the Fed's position has shifted notably in the past few months. Early this year, officials spent much of their time planning an exit from easy money crisis policies, and unwound several of their emergency lending programs. Now, if the Fed takes any action, an easing of policy looks more likely than any tightening.

Fed officials disagree on whether more action is needed and whether the steps the Fed chairman outlined would be effective. The consensus-driven Fed chief is weighing the arguments among the dozen regional Fed bank chiefs and the four other Fed board members who have a say in Fed policy as he assesses whether to do more.

"None of the (Fed's options) would move the needle significantly on either the economy or the risk of deflation," Harvard professor Martin Feldstein said after the Fed chairman's speech. Interest rates are already very low, he noted, but that has not generated much consumer or investment demand. "He's in a bad spot."

Yes, a bad spot it is… Sometimes you have to wonder where we'd be now if the government and its central bank had done nothing back in 2007 when the housing bubble first began to pop. Asking that question in a few more years will likely provide a clearer answer.

Repositioning Austrian Theory Part Deux

Posted: 28 Aug 2010 03:28 AM PDT

It seems that with the amount of Austrian/Libertarian extremists here at zerohedge that anything that remotely appears as a criticism to their orthodoxy is immediately tarred and feathered. For instance, my last post went vastly misunderstood.

The reason that I (and most "establishment" economists) invoke rational expectations is not out of shear ignorance of Austrian praxeology and the belief that all human action is legitimate notwithstanding human error. No, I am simply trying to prove that, in a world where all agents are rational (in the sense that they are capable of maximizing the present value of their individual utility), the Austrian monetary business cycle theory is over-zealous in its conclusions.

Of course monetary policy and QE shifts wealth from savers and capital preservers to banks, the government and, to a lesser extent, large corporations and other debtors (which of course boosts wealth inequality, investment in non-productive government services and moral hazard, given future expectations of loose policy). And to the extent that this wealth shift results in ineffective investment and monopoly power, monetary policy is harmful to the economy. But monetary policy, in and of itself, can not cause bubbles in asset markets in a rational world that adapts to historical market observances. When the government/Fed complex subsidizes banks and investment through monetary policy, this is nothing more than a forced increase in savings. Some Austrians like to claim that interest rate manipulation somehow dislodges the structure of production from equilibrium, but when the Fed manipulates interest rates they are simply acting as a valid economic agent and effectively stealing the nation's savings and presenting it, on a platter, to banks, corporations and the government. This may be wrong for many reasons, but this process is not, in and of itself, unsustainable into perpetuity. However, once you combine monetary policy (i.e., de facto subsidization of investor speculation) with a large enough group of euphoric economic agents, monetary policy can exacerbate exogenous bubble-producing behavior that would have generated independently, even without central bank intervention.

This is an important distinction to make since it allows us to see that not all money creation is intrinsically disruptive to market mechanics. Similar to monetary policy, when a company issues new equity (creates new shares) and re-invests the money inappropriately and irrationally, this is bad. However, when that same company issues new equity and invests it appropriately, no wealth is destroyed. If Fed-based monetary expansion/creation is used to expand inefficient government processes or corporations, wealth is destroyed, but there is no immediate link between money creation and asset bubbles.

Of course, the more astute among you will realize that no where in the preceeding paragraph did I argue in favour of the actions of the Fed to date. As the Fed is a small group of (ridiculously clueless) individual mortals, they will never be able to understand the functioning of markets to the extent necessary to control and/or smooth out business cycles. But it does not follow that the Fed absolutely has no role to play in the world and that all money creation should be abolished. In times of extreme wealth and power concentration, the Fed can conceivably level the playing field (even if to a small extent) by creating money that directly goes into the hands of the middle/lower class that is not dependent on past or future behavior. In other words, if the Fed set aside all its goals of economic kingdom-making, halted all free-market manipulation, and focussed on ensuring at least a semblance of economic equality among all citizens, it could really do some good for America. The staunch Austrian/Libertarian would claim that stealing money is never good, but this ignores all of the real-world and dastardly means by which the rich became rich and the poor became poor. Like all things in life, the "tolerable" level of a nation's wealth inequality is grey and cannot be computed, but it does not follow that we should not make our "best guess" as to what it should be.

Austrians must not forget that money creation can, in rare and exigent circumstances such as those before us today, function as a tool for "social good" (even if not in the absolutist libertarian sense). Case and point: If 1 person managed to accumulate all the wealth of the nation (whether by government decree, cunning or even productivity), some level of money produced by a central bank and distributed directly to the nation's people is probably not only the "right thing to do", but is simply the only practical thing to do for any democratically governed nation. Similarly, in a world where banks, government and citizens co-operated in a credit-spurred orgy for 20 years which culminated in a tapped out US middle class on the cusp of indentured servitude to the all-powerful banks, some level of money creation distributed directly to the "masses" could be a real force for good. Sure, austerity will provide the maximal economic "growth", but wealth redistribution (or some form of jubilee) is clearly needed as the US descends into a state of near-feudalism and extreme concentration of corporate and government power. Of course, excessive money printing could lead to hyperinflation and so the Fed must tread carefully and exercise restraint when attempting to at least partially reduce the wealth inequality plaguing America.

Money is power and the middle/lower classes of America are seeing their power and their money ebb away each and every day. To make matters worse, Fed policy is currently focussed on propping up inefficient/ineffective government processes, banksters and putting creditor/corporation interests ahead of a severely ailing American citizenship whose status as a 'going concern' becomes increasingly uncertain with each new economic release. 20 years of "trickle-down monetary economics" (the era of low interest rates) is enough. The American middle/lower classes need and deserve some form of equalization and retribution payment. After that, the markets should return to some level of freedom and government should be drastically reduced. Capitalism would, in essence, be given a "fresh start."

For those of you still not convinced of the social perogative that central banks should have to engage in a one-off distribution of wealth, go read a Steinbeck novel. Start with Grapes of Wrath.

lets talk personal silver gold ratios.

Posted: 28 Aug 2010 03:04 AM PDT

i just got into pm's this past june and the plan was to go 100% silver but when i reached 1500 ounces and reviewed the bank account again i decided that i needed to get more frn's into pm's and in a hurry. so last night i made a purchase from apmex that will all but get my finances in line to pretty much where i want them, i figured my ratio is 75-1 in favor of silver. if i look at it in value its almost 1-1.

i dont know if the ratio is where i want it to be but i do know that if the crash comes now then im pretty protected.

55K in metals
28K at home and 2K in the bank.

i still may be a little heavy with on hand cash but im hessitant to go "all in" into metals.

Bubble is in dollar, bonds, not gold, Turk tells King World News

Posted: 28 Aug 2010 02:56 AM PDT

10:55a ET Saturday, August 28, 2010

Dear Friend of GATA and Gold (and Silver):

GoldMoney founder, Freemarket Gold & Money Report editor, and GATA consultant James Turk tells King World News today that the market bubble is not in gold but in the U.S. dollar and U.S. government bonds, that silver is cheap relative to gold but more volatile, that investors are starting to realize the difference between real metal and paper claims on it, and a lot more. You can listen to the interview here:

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/8/28_J...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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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_...

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Support GATA by purchasing a colorful GATA T-shirt:

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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/

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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:

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Gold and silver analysts Haynes and Arensberg join King World News

Posted: 28 Aug 2010 02:41 AM PDT

10:40a ET Saturday, August 28, 2010

Dear Friend of GATA and Gold (and Silver):

Market analyst Ted Butler having returned entirely to his proprietary newsletter, the weekly precious metals review at King World News this week is done through interviews with Bill Haynes, chief executive of CMI Gold and Silver in Phoenix, and the Got Gold Report's Gene Arensberg, who will become regular analysts at KWN. They're interviewed by Eric King here:

http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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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

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

Chairman Of Joint Chiefs Of Staff Says National Debt Is Biggest Threat To National Security

Posted: 28 Aug 2010 02:33 AM PDT

Not China, not Russia, not North Korea, not Iran, not terrorists...According to Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, the "single biggest threat" to American national security is the US national debt, which is either $8.85 trillion (public debt), $13.4 trillion (total national debt), $20 trillion (total debt including GSE debt), or $124 trillion (total debt including unfunded obligations), depending on one's definition of the word "debt." And as Zero Hedge has long been warning, the imminent increase in interest rates (sooner or later), will eventually put the country in an untenable funding position. "Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit." The Chairman (the real one, not his pale imitation over at Marriner Eccles) politely forgot to add that the successful rolling of nearly $600 billion in debt per month is likely an even greater threat to national security.

More from Mike Mullen, commenting on the upcoming annual interest payment forecast:

“That’s one year’s worth of defense budget,” he said, adding that the Pentagon needs to cut back on spending.

“We’re going to have to do that if it’s going to survive at all,” Mullen said, “and do it in a way that is predictable.”

He also called on the defense industry to hire veterans and become more robust in the future.

“I need the defense industry, in particular, to be robust,” he said. “My procurement budget is over $100 billion, [and] I need to be able to leverage that as much as possible with those [companies] who reach out [to veterans].”

And since debt is now the functional equivalent of a nuclear bomb, it behooves readers to know just who the biggest threats to US national security are:

We hope it is appreciated promptly enough, that the entity highlighted in red can just as easily become the biggest domestic threat to national security, should the interests it represents, both political and financial, not get their way.

h/t Robert

Save Your ASSets First

Sunday, August 29, 2010

Gold World News Flash

Gold World News Flash

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