Gold World News Flash |
- The Biggest News From Apple Is Not TV, But Ping
- Markets Appear Ripe for a Sustainable Bullish Turn
- Gold & SP500 Crucial Pivot Point Article
- Bernanke Out of Bullets, But Not Bombs
- A Surge in Market Optimism Sweeps Oil Higher, Tempers Gold's Advance
- Mosseri and Loud: Hedge Your Bets
- An Exception in Equities
- Did JPMorgan Cover More Short Positions Yesterday?
- No Secret to Gold Investing. Just Accumulate.
- Update 7PM EST
- Gold & Investment In Failure
- Little Growth Means Big Trouble
- Hourly Action In Gold From Trader Dan
- Update on Grandich’s Offer To Totally Shame Self
- Gold Treads Water
- DC Begins the Bust Up... Thorium Cures the Free Market
- LGMR: Gold Extends 2nd-Best Annual Rise, Physical Silver Gets Tight in Hong Kong
- GoldSeek.com Radio Gold Nuggets: John Williams, Peter Eliades & Chris Waltzek
- Wednesday ETF Wrap-Up: BLV Tumbles, EPP Soars
- Bernanke Out of Bullets, But Not Bombs
- almost lost my arse in paper assets-a thank you
- Gold & Investment in Failure
- Hedge Your Bets
- Just a Mid-Cycle Slowdown?
- Collapse Gives WAY TO A Rally
- SP500 and Gold At Crucial Pivot Points
- Gold Extends 2nd-Best Annual Rise to End-Aug. as Physical Silver "Gets Tight" in Hong Kong
- Gold Extends 2nd-Best Annual Rise to End-Aug. as Physical Silver "Gets Tight" in Hong Kong
- 2010-09-01 Bloomberg Gold Survey: Take a Chance?
- Roubini: 2nd Half Looking Worse, Double Dip Over 40% Likely
- The Great Treasury Bond Crash of 2010
- Gold Seeker Closing Report: Gold and Silver Fall Slightly While Stocks Gain Over 2%
- Can A Family Of Four Survive On A Middle Class Income In America Today?
- Are Existing Home Prices Overrepresented By Up To 40%?
- The U.S. Path to Collapse
- New York Sun: As dollar diminishes, why shouldn't gold be audited?
- New York Sun: As dollar diminishes, why shouldn't gold be audited?
- Misguided Gratitude for Government Stimulus
- America Adds $210 Billion In Gross Debt In August, Rolls $620 Billion In Bills And Notes
- Risk back on as ISM and Chinese PMI surprise
| The Biggest News From Apple Is Not TV, But Ping Posted: 01 Sep 2010 07:33 PM PDT Dan Ramsden submits: When Wired Magazine published its controversial “Web is Dead” cover story a few weeks ago, many were quick to dismiss it as sensationalist. This was undoubtedly based on a misunderstanding. The Internet per se was not pronounced dead by the article, but rather websites as a dominant delivery mechanism for Internet content. And dead was probably not a word to be taken literally, but maybe an adjective like vulnerable comes closer to the mark. In fairness to the critics, had the article’s title been rendered in the future tense, the statement would have seemed more like a prophecy than a pronouncement, and this may have been easier to accept. Regardless, watching Steve Jobs Wednesday afternoon unveil his lineup of new products, all of which are based on or supported by apps rather than web destinations, the Wired article begins to hit eerily home. Of all the products and features unveiled by Apple (AAPL) yesterday afternoon, the one that may turn out to be the biggest news is Ping. Not to take away from the elegance of new iPod models, or the sleekness of the new Apple TV device, but neither of these offerings is ground-breaking for Apple. If anything, such a comment speaks to the high expectations that the company has established in the marketplace and the high standard to which we now hold it. And although Apple TV must still prove itself after an initial false start (while other alternatives have since begun to offer more or less similar consumer possibilities), there is good reason to believe that Apple TV will make an impact. Given the company’s trademark brilliance at product launches, updates, relaunches, redesigns – notwithstanding a so-called “antennagate” hiccup that nobody now even remembers – Apple TV could well become the standard that the iPod, iPhone, and iPad have already become. Complete Story »
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| Markets Appear Ripe for a Sustainable Bullish Turn Posted: 01 Sep 2010 07:33 PM PDT Chris Ciovacco submits: Early September is very important for the financial markets; especially for the bulls. Numerous elements are in place for a rally to take hold now. The markets have been weak and the bears have been in control. If the bulls cannot make a stand soon, it will be a bad sign for risk assets. The good news for the bulls is several factors, across numerous markets and asset classes, are pointing to a possible rally in risk assets:
Below is an "after" and "before" chart (click to enlarge) showing an area of a possible reversal for the S&P 500. Complete Story »
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| Gold & SP500 Crucial Pivot Point Article Posted: 01 Sep 2010 07:23 PM PDT Thursday Sept 2nd, 2010 Wednesday was a big session with better than expected manufacturing surging the market 3%. In this article I will do a quick technical take on the current situation for the SP500 and gold as they are both trading at a key resistance level. also its important to know what type of price action we will get in the next 1-2 days so you can have your profit targets or protective stops in place depending on which side of the market you are currently playing. SPY – SP500 Exchange Traded Fund – 60 Minute Chart The market is currently in a down trend which means bounces get sold. But if you take a look at the buying volume ratio at the bottom of the chart you will notice that in an uptrend buying surges are the beginning of a rally, and during a downtrend buying surges are the end of a rally. I also want to mention that a lot of volume traded at this current level which you can see on the volume by price bars on the chart. This means there will be a lot of sellers to ...
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| Bernanke Out of Bullets, But Not Bombs Posted: 01 Sep 2010 07:23 PM PDT [FONT=Arial,Helvetica,sans-serif][B][FONT=Arial,Helvetica,sans-serif] [B][FONT=Arial,Helvetica,sans-serif]Bernanke Out of Bullets, But Not Bombs Our central bank controls the printing press, so it has the ability to create money at will and use it to purchase anything it desires. It can and does purchase longer-dated Treasuries and other bank assets like home loans. If these funds are falling into the black hole of the banking system, there are ways for the Fed to cut out the middle man. For instance, the Fed could buy stocks and real estate directly from the public. The Fed could buy a trillion-plus dollars worth of S&P 500 stocks. Consumers that sold stock to the Fed would receive funds that didn't previously exist. M1 money supply would boom as demand deposits surged. But if the Fed continued to hold interest rates to zero, banks would continue to pay near-zero interest on their deposits. So, American consumers would then be faced with a choice: earn penni...
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| A Surge in Market Optimism Sweeps Oil Higher, Tempers Gold's Advance Posted: 01 Sep 2010 07:23 PM PDT courtesy of DailyFX.com September 01, 2010 12:01 PM There were a number of macroeconomic developments that would make it into the market fold Wednesday; but when we boil price action for commodities and other assets down, it was clear all roads led back to risk appetite trends. North American Commodity Update Commodities - Energy A Spark of Risk Appetite Throttles Oil Through Bloating Inventories, Questionable Data Crude Oil (LS Nymex) - $73.99 // $2.07 // 2.88% There was a blatant surge in investor sentiment across the capital markets Monday; and crude would certainly catch the bug of risk appetite. The nearly 3 percent rally from US-based oil was the biggest rally seen since the exhaustion of a month-long bull trend back on August 2nd. That being said, the rally wouldn’t offset the losses from the previous day now would it break the market from broader congestion. This same assessment can be attributed to nearly all the risk-sensitive assets. Wha...
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| Mosseri and Loud: Hedge Your Bets Posted: 01 Sep 2010 07:23 PM PDT Everyday New York-based investment gurus Jeff Mosseri and Doug Loud make key decisions for their high net-worth clients. Many of those decisions involve strategically positioning investors in small- and micro-cap gold and silver plays. In this exclusive interview with The Gold Report, you will learn some of the names of those plays and how they use Mosseri and Loud as hedges against a failing economy. The Gold Report: Today, we're talking with Jeff Mosseri, president of New York-based Greystone Asset Management and a director of Axiom Capital, as well as Doug Loud, who is the executive director of both companies. How do you go about making your clients money? Jeff Mosseri: We are paid by our clients to invest in small- and micro-cap stocks. We get very close to a company with a unique or very desirable product and that has recently had a problem or a corporate reorganization. We look for that problem to be solved by new management or with a new business plan. Then we look for an ...
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| Posted: 01 Sep 2010 07:23 PM PDT (Doug Casey, interviewed by The Gold Report) Editor's Note: Just recently, our friends at The Gold Report interviewed Doug on his thoughts about the precious metals bull market, how high gold will go, his views on gold stocks, and much more. Some of what he says below is not new to longtime readers, but we think his comments on gold investments being a potential exception to the rule for what's coming are well worth bringing to your attention. * * * The Gold Report: Doug, at a recent conference you said that the U.S. ought to default on its national debt now. Why that rather than letting it play out? Doug Casey: Several other things almost equally radical should be done besides defaulting on the debt. I recognize that an outright default is most unlikely, but the national debt should be defaulted on for several reasons. To start with, once the U.S. government defaults on its debt, people will think twice before lending it any more money; giving politici...
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| Did JPMorgan Cover More Short Positions Yesterday? Posted: 01 Sep 2010 07:23 PM PDT Did JPMorgan Cover More Short Positions Yesterday? Well, that little dip in the gold price in the wee hours of yesterday morning didn't amount to much... although it did set the low [around $1,231 spot] for the Tuesday trading session. The price began to move up sharply shortly before Comex trading began yesterday... and was up $14 by the time the London p.m. gold fix rolled around at 10:00 a.m. Eastern time. From that point, gold only tacked on another four bucks or so to its high of the day [$1,251.20 spot] around 2:00 p.m. in New York... and from there, gold slid a couple of dollars into the close of electronic trading at 5:15 p.m. Eastern time. The silver price declined starting at 1:00 p.m. Hong Kong time... and hit its low [around $18.80 spot] shortly after lunch in London... about an hour before the Comex opened. Then, in just over an hour, silver tacked on about 50 cents. The silver price continued to rise, albeit mores slowly, and bounced off its high of ...
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| No Secret to Gold Investing. Just Accumulate. Posted: 01 Sep 2010 07:23 PM PDT Since I am known as something of a gold bug, a lot of people write to me about gold, but since I am a paranoid lunatic, I don't read their letters, mostly because I now call myself Marvelous Macho Grande (MMG), figuring that an established alias could potentially come in handy when the prices of gold, silver and oil shoot higher and higher as inflation in consumer prices starts going parabolic as a result of the despicable Federal Reserve creating so, so, so much money, especially so that the despicable federal government can borrow and spend that selfsame so, so, so much money. So, you can see how a dramatic, romantic new name like Marvelous Macho Grande (MMG) would perfectly suit a guy like me, which is a guy with a theoretical massive coming increase in wealth from investing according to The Mogambo Perfect Portfolio (TMPP), which uses the Austrian school of economics (see Mises.org) and the last few thousands of years of history as Absolutely Compelling Reasons (ACR) to invest in...
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| Posted: 01 Sep 2010 07:23 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! September 01, 2010 02:58 PM A Holiday-like atmosphere will be with us for the balance of the week in North America. U.S. Stock Market – A no-where's fast outlook continues to be my best assumption. We've defined a trading range and the market should look to buy the bottom of it and sell the top until such time the bands change. U.S. Bonds – Thankfully I gave up betting against the bond market months ago but I remain extremely bearish going forward. Talks of a bubble should only be addressed to the U.S. bond market. The difficulty is bubbles can grow bigger and last longer than anyone could imagine. That appears to be the case here. Gold – Despite all the bubble nonsense and predictions of its demise a dime-a-dozen, gold has risen in a very constructive manner. I sooner see it move sideways into next week than a vault up here in...
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| Gold & Investment In Failure Posted: 01 Sep 2010 07:23 PM PDT by Jim Willie CB September 1, 2010 home: Golden Jackass website subscribe: Hat Trick Letter Jim Willie CB, editor of the “HAT TRICK LETTER” Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. Many observers to the wild gyrations, deep contortions, extreme measures, and other bizarre activity in the government and banking arenas are suffe...
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| Little Growth Means Big Trouble Posted: 01 Sep 2010 07:23 PM PDT View the original post at jsmineset.com... September 01, 2010 07:12 AM Dear CIGAs, Second quarter GDP growth numbers were revised down last week to a paltry 1.6% from 2.4%. Wall Street celebrated because some were expecting "growth" to be revised even lower. The stock market shot up on this news, but should everyone feel relieved because the U.S. got at least some growth? Consider this–we paid dearly for that 1.6% growth. If you add up what was spent on TARP, the stimulus bill, nearly $2 trillion spent by the Fed buying mortgage backed securities and Treasuries and all commitments to Fannie, Freddie, FHA and the FDIC, you come up with a total of about $3.7 trillion. This is what it cost to support the U.S. financial system according to Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program. (Click here for more on this story.) To me, spending or committing $3.7 trillion to the American economy and getting just 1....
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| Hourly Action In Gold From Trader Dan Posted: 01 Sep 2010 07:23 PM PDT View the original post at jsmineset.com... September 01, 2010 10:39 AM Dear CIGAs, Click chart to enlarge today's hourly action in Gold in PDF format with commentary from Trader Dan Norcini ...
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| Update on Grandich’s Offer To Totally Shame Self Posted: 01 Sep 2010 07:23 PM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! September 01, 2010 10:33 AM A few weeks back, with gold almost $100 lower and Silver Quest Resources substantially cheaper, I offered up “total humiliation” to myself by stating if gold didn’t make a new high in 2010 (old high $1,266.50) and SQI trade at least for a buck, I would wear a Canucks jersey for a day at the Vancouver Gold show in January, 2011. Gold is now within range of a new high (and I think it makes it in September) and SQI has $1+ written all over it. But not leaving well enough alone, I added to the chance of total humiliation by also stating that I would wear a pink Canucks jersey at same show if Continental Minerals (KMK) hadn’t received a takeover or merger proposal by the show. While I remain optimistic I will not face a worse than death episode in Vancouver, I do wish someone would have said ...
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| Posted: 01 Sep 2010 07:23 PM PDT courtesy of DailyFX.com September 01, 2010 06:52 AM 240 Minute Bars Prepared by Jamie Saettele Gold is making its way lower in an impulsive fashion. The first 5 wave decline ended following a terminal thrust from a triangle. The rally is in 2 equal legs, common for corrections, and may be nearing completion....
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| DC Begins the Bust Up... Thorium Cures the Free Market Posted: 01 Sep 2010 07:23 PM PDT DC Begins the Bust Up Wednesday, September 01, 2010 – by Staff Report Sheila Bair FDIC sees rule early next year on dismantling firms ... U.S. regulators aim to have a final rule early next year that will lay out how the government can dismantle financial giants if they are headed toward collapse, bank regulator Sheila Bair (left) said on Tuesday. Bair, who heads the Federal Deposit Insurance Corp, the agency that will be responsible for this resolution authority, said the regulators will first issue an interim rule that will be a vehicle for getting more detailed comments. – Reuters Dominant Social Theme: No bailouts anymore! Free-Market Analysis: So now the government is to step in and undo companies that are "headed" for collapse. This seems to us yet another step forward into a kind of bizarre alternative universe where free-markets are controlled and free-enterprise is managed. Anyone who has lived more than a few decades on the plane...
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| LGMR: Gold Extends 2nd-Best Annual Rise, Physical Silver Gets Tight in Hong Kong Posted: 01 Sep 2010 07:23 PM PDT London Gold Market Report from Adrian Ash BullionVault 09:25 ET, Weds 1 Sept. Gold Extends 2nd-Best Annual Rise to End-Aug. as Physical Silver "Gets Tight" in Hong Kong THE SPOT PRICE OF physical gold bullion touched its highest level since late-June's record peak early in London on Wednesday, extending August's record-high monthly close as world stock markets rose together with commodities and government bond yields. New data showed rapid growth in Chinese manufacturing and Australian GDP. Friday's key US employment data was preceded however by the private-sector ADP Payrolls Report, which showed its first loss since March, down by 10,000 jobs against the 20,000 growth expected. "We are in a bind," writes Bill Gross of bond-fund giant Pimco in his new monthly outlook, urging fresh quantitative easing of mortgage-backed securities. "Having grown accustomed to a housing market aided and abetted by Uncle Sam, the habit cannot be broken by going cold turkey ...
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| GoldSeek.com Radio Gold Nuggets: John Williams, Peter Eliades & Chris Waltzek Posted: 01 Sep 2010 07:00 PM PDT GoldSeek.com Radio Gold Nuggets: John Williams, Peter Eliades & Chris Waltzek
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| Wednesday ETF Wrap-Up: BLV Tumbles, EPP Soars Posted: 01 Sep 2010 06:33 PM PDT ETF Database submits: U.S. equity markets surged higher to start September, as the Dow gained more than 250 points thanks to strong overseas data from China and Australia. The Nasdaq and S&P 500 also had banner days, as these benchmarks both tacked on close to 3%. This news helped to draw a few investors out of gold, which saw its price ease back below the $1,250 mark as traders embraced risk and bid up oil prices. Crude surged more than $2/bbl. on hopes of rising international demand. In currency markets, the dollar weakened against most rivals, falling against both the euro and the Australian dollar. This weakness in the greenback, combined with risk taking, pushed investors out of U.S. Treasury bills and sent yields soaring higher; the Ten year briefly touched 2.6% before settling back at 2.58%, while the 2 year finished the day yielding 0.51%. Today’s robust gains came thanks to a flurry of positive data across the globe that helped to temporarily cool concerns over risky assets. The ISM factory index reading surged to 56.3 from 55.5 in the prior month, signaling growth in the manufacturing industry. Additionally, growth above expectations helped to propel Australian markets higher while high levels of manufacturing activity in the world’s largest exporter, China, helped to boost emerging market sentiment as well. The manufacturing report “gives some comfort, but that is only good until the next number,” said Darell Krasnoff, managing director at Bel Air Investment Advisors. This ‘next number’ will most likely be the unemployment report on Friday, which could signal if the jobs situation is finally beginning to improve. Complete Story »
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| Bernanke Out of Bullets, But Not Bombs Posted: 01 Sep 2010 06:26 PM PDT Word on the street is that the Fed is now "out of bullets." Many economists fear that in its efforts to spur recovery, the Fed may have already exhausted its array of monetary ammunition and that it has nothing left of significance to fire at the steadily advancing recession. They believe that since interest rates are already near zero and Fed policies have failed to inspire banks to expand commercial and consumer lending (despite ample bank reserves), the tools traditionally employed by the Fed have been rendered impotent. To their credit, these commentators are 100% correct in asserting that the Fed can't help the economy by printing more money. But it's not because the Fed policy is without consequence, but because the Fed has always been incapable of creating real growth. All it can do is manipulate the purchasing power of money. By keeping prices from falling more that they would have naturally, Fed intervention has created a burden. Lower prices would have cushioned the effects of the recession for many people. Complete Story »
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| almost lost my arse in paper assets-a thank you Posted: 01 Sep 2010 06:15 PM PDT it's me again, from the old forum and back onthe new forum. lostboy1980 from yon olden days of 06' =D i have a little story to tell about the crash of 08 and how irrational exuberance almost caught me with my pants down...and how GIM saved me once again. i started stacking in 06 when silver was in the 12's and gold was pushing 550. when the crash came, it was a great time and a no brainer to jump into certain stock sectors and so i did! bought PGH and a few other canroys, some pharma that had been knocked down and you fellers gave me a great heads up on sinovac during the swine flu panic. made some good money on that one! i kept my stack (naturally) and kept adding and profiting with equities. i did this for about 2 years and it took my mind away from the big picture! my plan at the time was to jump in and jump out when the downturn began, but i got so involved in stocks, i stopped paying attention to GIM, the commentators and the articles that helped build that stack to begin with. i got so involved with the % profit on stocks...well...i went astray. then on the 7th or 8th of july, i was having a conversation with the GF on the unemplyment in FL (got a house here for a steal, paid cash, hold it, own it in full and i'm so happy to be out of the big philly city. ) that conversation on unemployment lead to a question on how the stimulous package was working. i looked back over these boards and the usual commentators i love, other writers who share our views etc...and i nearly shit myself. i read that the money was almost dried up and the rest was being hoarded. the market had been flat for a month or so with the dow stuck in a range of 10300 and 10700...and then i noticed the gdp was decelerating. putting 2 and 2 together, i also noticed that unemployment was rising, no new jobs had been created and came to the conclusion that my/your original thoughts on the bailouts were correct. the liquidity injection was indeed a bandaid solution and things were starting to slow down across the boards. things were breaking up out there, high water everywhere. i stayed up till 5am into the next moring trying to make that hard choice to jump ship and sell all my stocks. little did i know the fed was going to get up there and speak the next day, but when i read about it, i sold it all. with about 3 hours to spare. the next day i borrowed some money from a friend and ran to the coin dealer here near daytona and bought 3 krugs. the GF picked up some pamp bars and a nice pair of gold earings. when the stock sales cleared, i ran out and snagged the last krug and two 100 coronas. in the midst of all of this, there was bad economic news in the mainstream once again with thier "unexpected" downturn, the dow dropped below 10G and all my stocks? they plunged 3-7% across the board other than 1 or 2 big pharma plays. all together, i would have lost a few grand had i not come to my senses and that's alot for an unemployed dog washer. i pulled out of the market with 3 hours to spare! if that aint cuttin it close, nothin is~! today, i went stacking and picked up some junk @ .15 over spot. some nice 64' halves, a 1 oz pamp gld bar and a mexican gold dealy that weighs in just under a half. i would have picked up eagles, but he wanted 300 over spot. that CANT be right...right? they dont command that type of premium now do they? i've been out of the loop like i said, but now i'm happy and back into it 100%....with QEII coming up and the rest of the world circling the drain, i'm a buyer from 750-1500...there was a time when i used to worry about the spot price, but now i'm grabbing what i can before the new tax and track laws come in to effect. it's getting scary out there, folks. so i wanted to say thanks again. you people always seem to have the relative news, while the mainstream media is a day late, making those that watch a dollar short. it's all about the fundimentals and the basic numbers and in my excitment over stocks, i almost "lost my way" . so i'm back and happy and quite unconcerned with what the price of metals do from here on. i will not be taxed and tracked. in other happy news, fla is heaven compared to philly. the leos are friendly, they love my electric skateboard and one wanted to ride it and see me paralell park. theres no crime and i'm well away from any major city. the gun laws are great and back to packin heat...as a matter of fact, everyone in fla seems to be packin! i'm surronded by people in thier 50s instead of the "pants on the ground " crowd and i can walk the streets at any hour. in philly, mace was illegal, taxes were horrible, they continue to suck money out of the people any way they can via new laws and permits (%300 business lisc to blog, lisc plates required on bicycles and also required when you purchase or sell one etc etc...) fla is great. overnout
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| Posted: 01 Sep 2010 06:13 PM PDT Many observers to the wild gyrations, deep contortions, extreme measures, and other bizarre activity in the government and banking arenas are suffering from severe confusion. The public is alarmed, even frightened, by the sequence of events, without much benefit of comprehension of what is happening or which clans are in control. The degree of deception hit a peak during the TARP Fund creation and disbursement, done behind private closed doors for the replenishment of sacred preferred stock, that bridge between corporate bonds and stock equity. The deception hit a very high pitch with the financial titan failures, the entire string of them. It has never stopped since.
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| Posted: 01 Sep 2010 06:05 PM PDT Everyday New York-based investment gurus Jeff Mosseri and Doug Loud make key decisions for their high net-worth clients. Many of those decisions involve strategically positioning investors in small- and micro-cap gold and silver plays. In this exclusive interview with The Gold Report, you will learn some hedges against a failing economy.
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| Posted: 01 Sep 2010 05:57 PM PDT The Pragmatic Capitalist submits: That’s the case Credit Suisse and the ECRI have been building over the last few months. The last two days have provided much needed relief to the bulls who were worried that their mid-cycle slowdown thesis was about to turn into an end-cycle nightmare. Credit Suisse maintains that global PMI’s are consistent with 3.5% and are a leading indicator of growth. Complete Story »
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| Posted: 01 Sep 2010 05:44 PM PDT Labor Greens Unite! Change climate with carbon price Parasitic kids Well that's a good sign. Not twelve hours after we went to press with our latest newsletter - highlighting how September is historically the market's worst month - and describing a Long Depression, stocks in New York rally by almost three percent. How is that good sign? The Bear had everyone feeling pretty bearish about him. You can measure this in the number of put option buyers or in surveys. But this morning, we went to Google Trends to see how many people were searching for what you might describe as bearish topics like, say, economic collapse.
You can see that thanks to the publication of two fairly high profile stories that went live late in August by Forbes and CNN, the conversation on collapse got a whole lot louder in the echo chamber that is the internet. This more or less proves that if you wait on the mainstream press to validate your own thinking, you'll always be late. It's only safe for the papers to report on something once everyone's thinking about it, and by then it's too late to trade it. But just to be safe, we asked our own in-house trading guru Murray Dawes what he thought. He wrote back that, "There is the possibility that the market has been 'caught short'. By that I mean that traders could be overly bearish and short the market as a whole. The good GDP data could be squeezing them out of those positions and causing a short, sharp rally." "If this is the case," he continued, "then you will see the market fall over again soon. If we see the ASX 200 close under the Point of Control of 4,400 in the next week or so then I would be confident that this current buying was a short squeeze and I would expect to see much lower prices in the near future. But until that occurs, this surprise rally should be respected." Murray's article, by the way, was called, "Beware the false break out." That term, "the false break out," along with "the point of control" is key to his method of trading the markets. You can find out more by reading about Slipstream Trader. Now we have to do something that's required from time to time if you're not familiar with our business model. We don't like talking about our business model because you'd probably rather be reading about the stock market or the economy. So we'll be quick about it! The Daily Reckoning is free. So is the other e-letter which we publish, Money Morning. In them, you read independent and provocative ideas about the share market and the world that we hope are useful and maybe even profitable. A whole back office team supports getting these e-mails out to about 100,000 people combined each day. The Daily Reckoning and Money Morning also contain the views of our independent analysts, Kris Sayce, Alex Cowie, Murray Dawes, and Greg Canavan. All of these analysts have chosen to work with us because, like you I suspect, they value a perspective that's not compromised by any other agendas. They're free to research and write about whatever they think will make you money, or keep you from losing it. The newsletters which all of those analysts write cost money. The subscription fee supports the whole operation, including keeping the free e-letters free. To sell subscriptions, we include advertisements. Without the advertisements - which usually feature our latest and best ideas - we find it's hard to sell subscriptions. Of course not everybody likes advertising. Not everybody likes vegemite either. But nearly everyone likes free. Of course nothing is ever free. So the price of you receiving a free e-letter that you may occasionally find value from is that you'll see advertisements for products to which you may already subscribe or to which you have no intention of ever subscribing. We hope it's not asking too much that even if you don't like the ads and don't want to subscribe, you recognise that we're in a business and this is how we can provide the e-letters for free. And if you recently received a note from Alex talking about a resource stock that Kris was recommending and wondered why Alex didn't' recommend it, the simplest answer is that Alex is not Kris. That is, Alex writes about resource stocks exclusively and does he research in his own way. It starts with a lot of spreadsheets and lately has included a lot mine site visits and phone conversations with geologists. Alex is well-versed in the resource sector and its nuances. Kris is a small-cap specialist. There are a lot of small-cap stocks in Australia. There are also a lot of resource stocks in Australia. Many of the small-cap stocks are also resource stocks. Thus, Kris will, from time to time, recommend a small-cap stock that is also a resource stock. We've found that some readers prefer Kris. Some prefer Alex. And some value what both are doing and realise that both are doing their own thing in their own way. If that troubles you...well...it shouldn't. And if it realllly troubles you, we invite you to take up our offer and request a refund. Finally, we see that the Greens and Labor have made a deal and that U.S. police have shot an armed man at the headquarters of the Discovery Channel in Maryland after he took people inside the building hostage. And we see that in some strange way, the events are not unrelated. Not causally, mind you, but philosophically. Part of the big agreement yesterday announced by Labor and Green honchos was the set-up of a multi-party parliamentary committee to put a price on carbon. You can read about it here. But when you read about it, it's clear that it's a pretty undemocratic way of pretending to have a debate without having a debate. Typical, but pretty cynical. And as ever with the political class, it defers to the exalted power of "experts." Green's Senator Christine Milne says that this very European process will, "Set up a parliamentary committee representing all the interests in the parliament committed to a certain idea and then enabling the appointment of experts to that committee. So the experts are not just to give evidence to the committee. The experts are part of the deliberations of that committee and that way you create the space in a parliament for people to talk through their own perspectives, nuance those perspectives and try to come up with a parliamentary consensus which has the support of everyone around the idea. " Emphasis added is our own. But really, how much nuance can you have when everyone on the committee can only be on the committee if they are already committed to a certain idea? How hard is it to build consensus when you exclude everyone who might disagree from participating? Milne continued: "You will note in the agreement the proviso for membership of the committee is that the people going onto it are committed to a carbon price. They may not all agree with the mechanism of achieving a carbon price but they all want to a carbon price and the idea is to invite everyone to it and the Coalition clearly if they were in opposition would be invited to join it on that proviso. So, it really is about grown up politics in Australia. It's about ending the all or nothing, it's about ending the accusations of back flips and sell outs and back downs and so on." In order to end the all or nothing false choice, it was necessary to create an all or nothing committee. Everyone who's on it has to be all for a carbon price. No one who's against a carbon price can be on it. That really is an effective way to end the argument. By not having it all and excluding other points of view. Of course the justification for this is that the people against a carbon price are really whack jobs who don't believe in global warming OR climate change. What's more, they aren't even experts. They're just people, people who believe that common sense is more valuable than credentials. They're just people. Very little people. Milne says, "It's a process we adopted in Tasmania to a very small degree when we achieved gay law reform by bringing in experts from the university, the justice department and so on to work with the parliamentarians. This I think can resolve this issue of a carbon price. It's very important to us. We want one as soon as possible and we think this mechanism is the best way of delivering it." In other words, the best mechanism of delivering an outcome that the public hasn't clearly endorsed is to use a non-democratic process that only includes people committed to the desired outcome. And that's democratic how? Honestly, we have to give credit where credit was due on this one. Julia Gillard had it right. Get a phone book from each city of 10,000 people or more in Australia. Pick ten people at random from each phone book. Put them on a Climate Change Committee. Put them in a three-star hotel outside the airport in Adelaide and give them six days to debate the issue and, if they decide, come up with a law. What could be more democratic than that? If a random jury of your peers is good enough to deliver equal justice under law in the criminal justice system - where judges and juries must deal with complex evidence and experts - why is it not good enough to for public policy too? In fact, the more we think about it, legislative conscription may be the best way to run the country after all. Each term, a new randomly selected group of conscripts is drafted to serve in Canberra. They are paid the minimum wage. You can be sure Parliament wouldn't sit for long and that the government would generally stay out of most people's lives and wallets, affording Australians the time and money to be good parents and neighbours. Let's have a vote! All in favour? All opposed? But wait, what does this have to do with eco-terrorist James Lee's bizarre actions and manifesto earlier today? Well, in point one of Lee's manifesto, he seems to endorse Senator Milne's committee of experts idea. We've reproduced the whole point here so we're not selectively quoting, although the emphasis added is ours and not Lee's:
If poor Mr. Lee had just decided to run for office in Australia, he could be earning a public wage now instead of cooling in a morgue somewhere. He certainly has the right instincts to be in politics. He believes in coercion. He believes in State control of the media. He thinks "top down" solutions imposed from above should trump individual choices. He believes in expert scientists of a certain point of view. He's against human civilisation and believes that children are filthy pollution. Point four of his manifesto gets to the heart of his pro-planet, anti-human life message. He writes that, "Civilisation must be exposed for the filth it is. That, and all its disgusting religious-cultural roots and greed. Broadcast this message until the population of the planet is reversed and the human population goes down! This is your obligation. If you think it isn't, then get the hell off the planet! Breathe Oil! It is the moral obligation of everyone living otherwise what good are they??" Gee. That's pretty much straight out of the tyrant's modern political play book, isn't it? Civilisation is filth? Check! Religion and culture and tradition are disgusting? Check! Human population should go down because it's a pestilence? Check! Your obliged to agree? Check! If you disagree, go to hell? Check! If you disagree, you're immoral? Check! You get the feeling that some people just don't like humanity. You get the feeling that some people view human life as a problem to be solved. That solution is vague, but usually involves somebody else dying without being killed. You get the feeling that deep down, some people view human beings as parasites on the planet. You get the feeling some people don't feel very good about themselves but would like to take it out on the rest of us. We also get the feeling that some people don't view human life as the Ultimate Resource, as economist Julian Simon put it. Our view is that these people are themselves very selfish. They can't imagine the world they live in coping with all the problems they perceive. So they want to destroy the world as it is and remake it into the world they want to live in, even if that world doesn't include you and me. It's all very self-centred, moralistic, and unimaginative. And of course, Lee was plain crazy. He wrote, as this paragraph proves:
Of course the Squirrels! TV will save us! Save the froggies. It would all be absurd and sad if there weren't real live crazy people trying to run the government who didn't' share more or less the same anti-human, anti-civilisation worldview. Dan Denning
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| SP500 and Gold At Crucial Pivot Points Posted: 01 Sep 2010 05:38 PM PDT
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| Gold Extends 2nd-Best Annual Rise to End-Aug. as Physical Silver "Gets Tight" in Hong Kong Posted: 01 Sep 2010 05:29 PM PDT
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| Gold Extends 2nd-Best Annual Rise to End-Aug. as Physical Silver "Gets Tight" in Hong Kong Posted: 01 Sep 2010 05:29 PM PDT
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| 2010-09-01 Bloomberg Gold Survey: Take a Chance? Posted: 01 Sep 2010 05:26 PM PDT Yesterday, Bloomberg revealed the results of its gold price survey.
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| Roubini: 2nd Half Looking Worse, Double Dip Over 40% Likely Posted: 01 Sep 2010 05:13 PM PDT Nouriel Roubini, or "Dr. Doom" as he's also known, is a New York University professor and co-founder of Roubini Global Economics. As his nickname implies, his opinions tend to be on the gloomy side, and in this recent interview he describes "monetary policy as impotent" and estimates a GDP growth rate in this year's second half of, well, just about zero percent. Basically, all the gimmicks tried so far, including the job-boosting census, as well as cash for clunkers, first-time homebuyer tax credits, and so forth, have artificially bolstered earlier growth, but are destined to leave gaping holes in the economy in this year's second half. So, as he succinctly states, "in the short run we may end up like Japan, in a severe deflationary trap." See the CNBC interview below which came to our attention via The Daily Bail's post on how Bernanke's quantitative easing fantasy is destined to fail. Roubini: 2nd Half Looking Worse, Double Dip Over 40% Likely originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| The Great Treasury Bond Crash of 2010 Posted: 01 Sep 2010 04:06 PM PDT
OK, maybe it hasn’t really crashed yet. But the 3 1/2 point sell off in the futures for the 30 year Treasury bond (TBT), at the end of last week was the sharpest drop in 18 months. Winston Churchill’s great 1942 quote, which marked the turning of the tide for Britain in WWII, comes to mind. “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” In my recent piece on the extreme overvaluation of government debt, I pointed out that the last time rates were this low, Treasury bonds brought in a miserly 1.9% yield for a decade (click here for the piece at http://www.madhedgefundtrader.com/august-26-2010.html ). Professor Jeremy Siegel at the Wharton School at the University of Pennsylvania has one upped me. After yields bottomed in 1956, bonds suffered negative returns for 30 years! This should have occurred to me, as the first mortgage I took out on a Manhattan coop in 1982 carried an 18% interest rate. That was then Federal Reserve governor Paul Volker was waging a holy war on inflation and eventually won. I took out one of the first ever floating rate mortgages, and by the time I sold it three years later for my first double in real estate, the rate had melted down to only 11%. I tell this story to kids buying their first starter homes now and they look at me like I’m some kind of dinosaur. I have always believed that markets will do whatever they have to do to screw the most people. A big part of the parabolic move in bond prices was caused by so many investors going into this the wrong way. Hedge funds were short Treasuries and long steepeners, while mutual and pension funds were underweight. Remember, this was supposed to be the trade of the year? Of the decade? Only individuals and momentum players have been in there buying with both hands, not because they love low yielding bonds so much, but because they hate equities. All it took to set the cat among the pigeons was for Q2 GDP to come in at 1.6%, not as bad as expected, and for Ben Bernanke to remain silent about any plans to flood the markets with more liquidity. This may not be the top in the bond market, but it is starting to resemble what tops look like. One more equity puke out in September could easily get us there. To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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| Gold Seeker Closing Report: Gold and Silver Fall Slightly While Stocks Gain Over 2% Posted: 01 Sep 2010 04:00 PM PDT Gold climbed to a new 2 month high at $1254.74 a little after 8:30AM EST before it dropped back down to as low as $1242.15 by late morning in New York, but it then bounced back higher into the close and ended with a loss of just 0.15%. Silver climbed to as high as $19.48 and fell to as low as $19.22 before it also bounced back higher and ended with a loss of just 0.05%.
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| Can A Family Of Four Survive On A Middle Class Income In America Today? Posted: 01 Sep 2010 03:51 PM PDT 
You see, despite government efforts to manipulate the official inflation numbers, the price of everything just keeps going up. The price of food slowly but surely keeps moving up each year. The price of gas is far higher than it was 10 or 20 years ago. Taxes just keep going up. Utility bills just keep going up. Each year middle class American families have found themselves increasingly squeezed as their expenses have risen much more rapidly than their incomes. So just how far will $50,000 go for a middle class American family of four today? Well, $50,000 breaks down to about $4,000 a month. So how far will $4,000 a month stretch for a family of four in today's economy?.... First of all, the family of four needs some place to live. Even though house prices have come down a bit recently, they are still quite expensive compared to a decade ago. Let's assume that our family of four has found a great deal and is only spending $1000 a month on rent or on a mortgage payment. In many of the larger U.S. cities this is a completely unrealistic number, but let's go with it for now. Next, our family of four has to pay for power and water for their home. This amount can vary dramatically depending on the climate, but let's assume that the average utility bill is somewhere around $300 a month. Our family is also going to need phone and Internet service. Cell phone bills for a family of four can balloon to ridiculous proportions, but let's assume that our family of four is extremely budget conscious and has found a package where they can get basic phone service, Internet and cable for $100 a month. Most middle class American families spend far more than that. Both parents are also going to need cars to get to work. Let's assume that both cars were purchased used, so the car payments will only total about $400 a month. If the vehicles were purchased new this number could potentially be much higher. If our family has two cars that means that they will also be paying for automobile insurance. Let's assume that they both have exemplary driving records and so they are only spending about $100 a month on car insurance. Our hypothetical family of four is also going to need health insurance. In the past, families could choose to go without health insurance (at least for a while), but now thanks to Barack Obama all American families will essentially be forced to purchase health insurance. Health insurance premiums are absolutely skyrocketing, but let's assume that our family has somehow been able to find an amazing deal where they only pay $500 a month for health insurance. Our hypothetical family is also going to have to eat. Let's assume that our family clips coupons and cuts corners any way that it can and only spends about $50 for each member of the family on food and toiletries each week. That works out to a total of $800 a month for the entire family. Lastly, the parents are also going to need to buy gas to get to and from work each week. Let's assume that they don't live too far from work and only need to fill up both cars about once per week. That would give them a gasoline bill of about $50 a week or $200 a month. Of course if either of them lived a good distance from work or if a lot of extra driving was required for other reasons this expense could be far, far higher. So far our family has spent $3400 out of a total of $4000 for the month. Not bad, eh? Wrong. We haven't taken federal, state and local taxes out of the paycheck yet. Depending on where our family lives, this will be at least $1000 a month. So now we are $400 in the hole. But to this point we have assumed that our family does not have any credit card debt or student loan debt at all. If they do, those payments will have to be made as well. In addition, the budget above includes no money for clothing, no money for dining out, no money for additional entertainment, no money for medications, no money for pets, no money for hobbies, no money for life insurance, no money for vacations, no money for car repairs and maintenance, no money for child care, no money for birthday or holiday gifts and no money for retirement. On top of all that, if our family of four has a catastrophic health expense that their health insurance won't pay for (and health insurance companies try to weasel out of as many claims as they can), then our family of four is not just broke - they are totally bankrupt. Are you starting to get the picture? It is getting really, really hard out there for middle class American families these days. And unfortunately, many American families now have at least one parent that is not working. In some areas of the nation it just seems like there are virtually no jobs available. For example, at 14.3%, the state of Nevada now has the highest unemployment rate in the nation. Michigan (which had been number one) is not very far behind. But even those Americans who are able to find work are finding themselves increasingly squeezed. For many Americans, a new job means much lower pay. Millions of highly educated people who once worked in professional positions now find themselves working in retail positions or in the food service industry. Many are hoping that the economy will "turn around" soon and that they will be able to go back to higher paying jobs, but the truth is that the U.S. economy is simply not producing enough good jobs for everyone any longer. So where did all the good jobs go? Well, millions of them have been shipped off to China, India and dozens of other nations around the globe. Today the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States. A Chinese factory worker makes about a tenth of what an American factory worker makes. And China continues to keep their currency artificially low so that jobs will continue to flow into China and so that we will continue to run a massive trade imbalance with them. In a previous article, "Winners And Losers", I went into much greater detail about how globalism is destroying middle class jobs. We are rapidly moving toward an America where there will be a small group of "haves" and a very large group of "have nots". The middle class in America is going to continue to shrink and shrink and shrink in the years ahead. Not only are both parents going to have to work to pay the bills, but both parents in many families will be forced to take two or three jobs each just to make it each month. So what do you think? Do you think that a family of four can make it on a middle class income in America today? Feel free to leave a comment with your thoughts....
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| Are Existing Home Prices Overrepresented By Up To 40%? Posted: 01 Sep 2010 03:04 PM PDT
A reader writes in with some troubling observations on what could potentially be a pretty substantial scheme to artificially "boost" existing home prices by up to 40%, putting all the NAR data, and all other relevant public housing data materially into question. Since trick is painfully simplistic, and all too easy to spot, we wish to open it up to our readers for verification, as this could be a huge hit to the credibility of all existing home price metrics, and put into question all transitory upticks in home prices, such as the backward looking Case-Shiller index indicated yesterday. From the email:
Simply said, this means that any pricing data coming off Multiple Listing Services is fatally flawed, and if this observation is verified, could potentially be a simplistic means to misrepresent the true home price by up to 40% higher. As for the examples, here is property 1 as represented by the MLS: note the price of $159,500
And below is the actual final auction price on the exact same property taken from RealtyBid:
The MLS certainly pulled all the correct information on the property... all except for the price. Another example: 5572 Goodhue Ave, Rockford IL 61109. The house was sold in auction for a purchase price of $90,061 as the below screenshot from the HUD auction indicates:
Yet the very same property was listed on foreclosure.com, and subsequently pulled by Zillow, as having a value of $113,400
These are merely two examples. We have a simple question: which price is the NAR, Case-Shiler, and every other resi real estate index service pulling: the higher or the lower. For the ongoing credibility of the suddenly green shoot free recoveryless recovery, we at least hope it is the correct one. Which is why we ask readers to advise us of any comparable bifurcations between paid and listed price on properties they may be aware of. Suddenly David Rosenberg's claim that no properties over $750,000 sold in the past month doesn't seem all that outlandish...
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| Posted: 01 Sep 2010 02:52 PM PDT (snippet) Rising gold and silver prices indicate that the U.S. is headed for an explosion in budget deficits that will rise far beyond what it can pay for through borrowing. Leading Chinese economists are now calling Japanese debt less risky than U.S. debt and with the Japanese savings rate in decline, the U.S. will soon have nobody left to borrow from. The only option will be monetization and already the Federal Reserve is getting ready to buy $10 billion to $30 billion per month in U.S. treasuries to keep its balance sheet at inflated levels. There are now 50 million Americans on Medicaid, with annual Medicaid costs rising 36% over the past two years to $273 billion. The recently enacted health care bill will add 16 million more Americans to Medicaid beginning in 2014, but the U.S. government will likely go bust by then. It is impossible to have an economic recovery when jobless benefits are encouraging Americans to stay unemployed. U.S. unemployment insurance spending has nearly quadrupled since 2007 to $160 billion annually. Even food stamp costs have surged 80% over the past two years to $70 billion annually. Once Americans get used to receiving and relying on government entitlement programs, it is hard to wean them off of them. NIA has been hearing reports from members with friends who say they will only "come out of retirement" if they can find a job that pays $25 per hour or more, because with anything less it wouldn't be worth losing their jobless and food stamp benefits. Americans expect to receive their jobless benefits forever and we are sure Obama will continue to extend them leading up to the 2012 election. There are now countless warning signs all around us on a daily basis that the U.S. is headed for a complete societal collapse. NIA received an overwhelming response from its members when we asked you to submit any signs you see that a societal collapse is near. The response we received was so strong that we are now beginning to produce a documentary about America's upcoming collapse of society. The documentary will be over an hour long and we are hoping to release it by the end of October. It will go beyond the economic facts and statistics that were discussed in 'Meltup' and help expose the upcoming collapse from a real life perspective. NIA believes this documentary will appeal to a very mainstream audience and help open up the world's eyes to the truth about the path this country is on. More Here.. 
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| New York Sun: As dollar diminishes, why shouldn't gold be audited? Posted: 01 Sep 2010 02:51 PM PDT The Gold Audit From The New York Sun http://www.nysun.com/editorials/the-gold-audit/87065/ Congressman Ron Paul is in the news again, this time for calling for an audit of America's gold reserves. He issued the call in an interview with a news service run by a gold dealer, Kitco News, which reported that the congressman intends to introduce legislation calling for such an audit of what we hold at Fort Knox and other sites, such as the New York Federal Reserve Bank in lower Manhattan. It's the kind of thing people tend to laugh at, the way they once did when Doctor Paul launched his legislative campaign to audit the U.S. Federal Reserve. Yet after years of persistence by the Texas Republican, Congress finally passed a law requiring an audit of the Fed. It passed the mandate by a wide margin and a bi-partisan vote. So whatever snickering there will be over Paul's proposal for an audit of the gold holdings, it will be more muted. We are not in the camp that believes a vast conspiracy has stolen America's gold. But neither are we in the camp that sees any harm to an audit. As Paul put it to Kitco News: "If there was no question about the gold being there, you think they would be anxious to prove gold is there." He has been pressing the point, on and off, since the early 1980s, when he was a member of the United States Gold Commission. He reminded the interviewer from Kitco that his recommendation back then that Congress audit the gold reserve was rejected by 15 of the Gold Commission's 17 members. It strikes us that it would not be a bad thing were an audit to keep our national mind focused on our gold holdings -- particularly at a time when the value of the dollar has collapsed to less than a 1,200th of an ounce of gold. ... Dispatch continues below ... ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth If that weren't enough of a warning, the Bloomberg wire reports that "gold's most-accurate forecasters" are predicting that the value of the dollar may fall to but a 1,500th of an ounce of gold. It reports that what it calls the most widely held option on gold futures in New York is for the dollar to fall to but a 1,500th of an ounce of gold by December. The lowest value to which the dollar has plummeted so far is a 1,266.50th of an ounce of gold, which was the value of the dollar recorded on June 21. Bloomberg reports that holdings through what it calls "bullion-backed exchange-traded products" are within a 10th of a percent of the all-time high of 2,075 metric tons. It quotes one Deutsch Bank analyst, Dan Brebner -- whom it calls "the most accurate forecaster so far this year" -- as predicting the value of the dollar may drop to a 1,550th of an ounce of gold. Suddenly the question to ask is not why in the world is Paul asking for this audit but why is he the only member of Congress making our gold holdings an issue. It was only a decade ago, at the start of the presidency of George W. Bush, that a dollar was worth nearly a 250th of an ounce of gold. As it started dropping, these columns warned repeatedly that it was a signal to be heeded, starting with "The Bush Dollar," which was issued in December, 2005, and carrying on up through "The Pelosi," "The Greenspan," "The Bernanke," "Ron Paul's Prescience," "$1,000 Gold," "The Obama Dollar," "Golden Opportunity," and "Paul Ryan's Question," just to name but a few of the editorials of the Sun that have touched on this topic. By our lights a weak dollar policy is a strategic mistake for America. We felt that way when President Carter and his treasury secretary at the time, W. Michael Blumenthal, were running a weak dollar. We've never credited the idea that one cannot have a strengthening dollar and a growing economy, an idea that should have been thoroughly discredited during the Reagan years and the Clinton years. One could say that a strong dollar is a good idea that is bi-partisan in pedigree. But what good can come of a weak dollar policy, such as the one being pursued by Messrs. Obama, Geithner, Bernanke, Mrs. Pelosi, and the others who have various levels of constitutional -- or, in the case of Mr. Bernanke, non-constitutional -- authority over policy in respect of America's money? As the value of the dollar evaporates, why in the world wouldn't ordinary Americans want to have the gold holdings they've been told about for so many years given a full and independent audit? Join GATA here: Toronto Resource Investment Conference The Silver Summit New Orleans Investment Conference * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php
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| New York Sun: As dollar diminishes, why shouldn't gold be audited? Posted: 01 Sep 2010 02:51 PM PDT The Gold Audit From The New York Sun http://www.nysun.com/editorials/the-gold-audit/87065/ Congressman Ron Paul is in the news again, this time for calling for an audit of America's gold reserves. He issued the call in an interview with a news service run by a gold dealer, Kitco News, which reported that the congressman intends to introduce legislation calling for such an audit of what we hold at Fort Knox and other sites, such as the New York Federal Reserve Bank in lower Manhattan. It's the kind of thing people tend to laugh at, the way they once did when Doctor Paul launched his legislative campaign to audit the U.S. Federal Reserve. Yet after years of persistence by the Texas Republican, Congress finally passed a law requiring an audit of the Fed. It passed the mandate by a wide margin and a bi-partisan vote. So whatever snickering there will be over Paul's proposal for an audit of the gold holdings, it will be more muted. We are not in the camp that believes a vast conspiracy has stolen America's gold. But neither are we in the camp that sees any harm to an audit. As Paul put it to Kitco News: "If there was no question about the gold being there, you think they would be anxious to prove gold is there." He has been pressing the point, on and off, since the early 1980s, when he was a member of the United States Gold Commission. He reminded the interviewer from Kitco that his recommendation back then that Congress audit the gold reserve was rejected by 15 of the Gold Commission's 17 members. It strikes us that it would not be a bad thing were an audit to keep our national mind focused on our gold holdings -- particularly at a time when the value of the dollar has collapsed to less than a 1,200th of an ounce of gold. ... Dispatch continues below ... ADVERTISEMENT Sona Resources Expects Positive Cash Flow from Blackdome, On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia. Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013." For complete information on Sona Resources Corp. please visit: www.SonaResources.com A Canadian gold opportunity ready for growth If that weren't enough of a warning, the Bloomberg wire reports that "gold's most-accurate forecasters" are predicting that the value of the dollar may fall to but a 1,500th of an ounce of gold. It reports that what it calls the most widely held option on gold futures in New York is for the dollar to fall to but a 1,500th of an ounce of gold by December. The lowest value to which the dollar has plummeted so far is a 1,266.50th of an ounce of gold, which was the value of the dollar recorded on June 21. Bloomberg reports that holdings through what it calls "bullion-backed exchange-traded products" are within a 10th of a percent of the all-time high of 2,075 metric tons. It quotes one Deutsch Bank analyst, Dan Brebner -- whom it calls "the most accurate forecaster so far this year" -- as predicting the value of the dollar may drop to a 1,550th of an ounce of gold. Suddenly the question to ask is not why in the world is Paul asking for this audit but why is he the only member of Congress making our gold holdings an issue. It was only a decade ago, at the start of the presidency of George W. Bush, that a dollar was worth nearly a 250th of an ounce of gold. As it started dropping, these columns warned repeatedly that it was a signal to be heeded, starting with "The Bush Dollar," which was issued in December, 2005, and carrying on up through "The Pelosi," "The Greenspan," "The Bernanke," "Ron Paul's Prescience," "$1,000 Gold," "The Obama Dollar," "Golden Opportunity," and "Paul Ryan's Question," just to name but a few of the editorials of the Sun that have touched on this topic. By our lights a weak dollar policy is a strategic mistake for America. We felt that way when President Carter and his treasury secretary at the time, W. Michael Blumenthal, were running a weak dollar. We've never credited the idea that one cannot have a strengthening dollar and a growing economy, an idea that should have been thoroughly discredited during the Reagan years and the Clinton years. One could say that a strong dollar is a good idea that is bi-partisan in pedigree. But what good can come of a weak dollar policy, such as the one being pursued by Messrs. Obama, Geithner, Bernanke, Mrs. Pelosi, and the others who have various levels of constitutional -- or, in the case of Mr. Bernanke, non-constitutional -- authority over policy in respect of America's money? As the value of the dollar evaporates, why in the world wouldn't ordinary Americans want to have the gold holdings they've been told about for so many years given a full and independent audit? Join GATA here: Toronto Resource Investment Conference The Silver Summit New Orleans Investment Conference * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php
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| Misguided Gratitude for Government Stimulus Posted: 01 Sep 2010 02:23 PM PDT Well, August washed up. It was the worst month for US stocks in almost a decade. And yesterday didn't help. The Dow couldn't manage a rally. It rose just 4 points. The British newspaper, The Telegraph, has the story: Those fears took centre stage again during the final day of trading. In New York, markets enjoyed some brief respite from the blizzard of weak data as reports on the US housing market and consumer confidence proved better than feared. The Conference Board's index of consumer confidence climbed to 53.5 last month from 51 in July, while the latest reading from the respected S&P/Case-Shiller index showed that home prices were up 4.2pc in June compared with a year ago. The day's rally proved short-lived, however, after the minutes of the Federal Reserve's latest meeting returned investors to the summer's familiar themes. Fed chairman Ben Bernanke has spent the past few weeks facing increasing pressure from markets to publicly declare he will do more to fight the prospect of a second recession if the recovery stumbles further. According to the minutes, some members of the Fed's Open Market Committee saw "increased downside risks to the outlook for both growth and inflation". That admission left the Dow up just 4.99 points at 10,014.72 for the day, while the S&P ended the day up 0.41 at 1,049.33. As predicted on this page, both Martin Wolf and Paul Krugman are taking the low road. Not that we wouldn't take it too, were we in their position. They urged the Obama team to undertake massive programs of "stimulus." Now that the stimulus hasn't worked, they say it wasn't massive enough. And thank God the administration at least took some of our advice, they add. Otherwise, things would be a lot worse! In today's Financial Times, Wolf refers to a recent paper by Alan Blinder and Mark Zandi. The two use a "standard macro-economic model" to determine that without the feds' intervention the decline in GDP would have been three times worse and unemployment would have risen to over 16%. And, can you believe it, we would have had a federal deficit of $2.6 trillion. Oh man, oh man...we're so grateful to Wolf, Krugman, Summers, Obama, Bernanke and all the other savants who protected us from such a dreadful fate. But wait a minute, this "standard macro-economic model" sounds great and all...but we can't help but wonder. It can predict precise outcomes based on federal policy inputs, right? That is, if the feds were to do such and such...it tells us what will happen, right? And Wolf says it's "standard," so we imagine that you can get it at any Wal-Mart or filling station. So, the Obama team must have had it two years ago, right? We can't help wonder if this was the same model they used when they forecast that unemployment wouldn't go over 8% - if Congress agreed to the stimulus bill the administration proposed. Must have been a different one... Because Congress did pass the stimulus bill and unemployment rose over 9% anyway. And it's still over 9% - almost 2 years after the stimulus effort got underway. So, maybe this "standard macro-economic model" is full of... But let's imagine that it isn't. Let's allow our imaginations to take flight...to soar...to loose themselves from the gravity of worldly cares or practical reality. Let's imagine that these economists have a clue! Imagine that the feds had done nothing - which was more or less standard policy for the nation from its founding in 1776 up until the middle of Herbert Hoover's term in 1930...and for all the years that preceded them...all the way back to the founding of Rome. Now, let's imagine that Blinder and Zandi are right. Without fed intervention, GDP would have sunk 12% - three times more than the actual loss...and half the loss of the Great Depression. Well, that would have been a disaster, right? Well. Maybe not. It might have been a blessing. The point of a correction is to correct. The Blinder/Zandi study tells us that the economy had mistakes equal to 12% of GDP. Okay...well, maybe the correction overshoots. Who knows? But think of the crazy years of the Bubble Epoque...when lenders were giving unemployed people a mortgage for 110% of the inflated value of a house. Think about the Private Equity deals based on growth assumptions that were hallucinatory. Think about the hundreds of trillions' worth of derivatives based on complex formulae that were phony and silly? Think of all the decisions made on the assumption that consumer credit would continue to expand as it had from 1949 to 2007. Was one of every 8 of them too optimistic? Too ambitious? Too unrealistic? We'd be surprised if there weren't more errors...far more than 12% of GDP. Now ask yourself...what good was done by failing to correct those mistakes? By failing to wash out the excess debt? Failing to allow insolvent banks to go broke? Failing to permit worn-out, uncompetitive businesses to die in peace? We don't know how many mistakes there were. We don't know how far GDP SHOULD go down. And we don't know what would have happened if willing buyers and sellers had been allowed to sort themselves out in the age- old ways - by panic, default, bankruptcy, restructuring, and reconstruction. We don't know. We'll never know. But there is no reason to think we'd be any worse off if we'd found out a year ago. A 12% drop in GDP might have been just what we needed. We could be on the road to prosperity now, rather than looking at another 5 to 15 years of stagnation, decline, and desperation. And more thoughts... But we have good news. Yes, dear reader, genuine, no-doubt-about-it good news. Two bits of good news, actually. First, the café across the street from our office serves a proper café au lait. A real one. In Paris these days, if you ask for a "café au lait" they mark you as a foreigner. Parisians ask for a "café crème." Trouble is, the café crème doesn't have much milk in it. It tends to be a bit watery and bitter. A proper café au lait, on the other hand, is served with a little pitcher of hot milk. Not many cafes in Paris still serve it that way - unless you ask them specifically. Fortunately, the one across the street still does it the right way. Second, and perhaps more important, we discovered yesterday that tea- totallers die sooner than heavy drinkers. This comes as a great relief to your editor. He sat down last night with a bottle of Lussac St. Emilion to celebrate. Here's the story from John Cloud (originally appearing in Time Magazine):
Bill Bonner
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| America Adds $210 Billion In Gross Debt In August, Rolls $620 Billion In Bills And Notes Posted: 01 Sep 2010 02:21 PM PDT
As per the August 31 DTS statement, the US ended the month with a new all time record of $13.45 trillion in debt, and increase of $210 billion from the beginning of the month (or $225 billion in public debt, net of intragovernmental holdings). With just 30 days left in fiscal year 2010, the US has added $1.54 trillion in the eleven months ended August 31, a monthly average increase of $140 billion. As a point of reference, the US has received $1.53 trillion in withheld income tax over the same period, confirming that the US continues to issue more than one dollar in debt for every dollar it receives via income tax revenue. This balance will likely be tipped soon courtesy of changes to the tax law, which will adversely impact the withheld tax line, implying even more funding has to come in the form of debt.
Additionally, the US rolled another $513 billion in short-term debt: a number which continues to be persistently high, even as the total amount of short term debt as a percentage of total has declined steadily from 30%+ of total to around 20% as we have written elsewhere. Another $106 billion in Notes was rolled as well, with the intramonth cash balance dropping to a dangerous sub-$5 billion.
For the 11 months ending August 30, the US has paid $180 billion in interest expense in a time of record low interest rates. At the current rate, we expect that the statutory, and completely irrelevant, debt limit of $14.3 trillion will be breached in the first two months of 2011. At that point total federal debt as a % of US GDP will be roughly 100% in its purest definition, and the inevitable greenlighting by Congress to raise the ceiling then will means that America is fully sliding into a debt-to-GDP ratio of >1.
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| Risk back on as ISM and Chinese PMI surprise Posted: 01 Sep 2010 02:15 PM PDT
A flurry of economic data sent markets higher today as growth concerns were trumped by upside surprises that sent risk surging off of significant support levels. Aussie GDP started the rally last night, as Q2 YoY came in at 3.3% vs 2.8% expected vs 2.6% prior, with the consumer driving the growth. Chinese PMI came in at 51.7 vs 51.2 prior, just around expectations, piggybacking on the Aussie data. However, GS econ was not impressed:
The IP number due on September 13 should provide more clarity about Chinese manufacturing growth. PMIs in Europe and the rest of Asia were weak, with UK’s at 54.3 vs 57.0 expected vs 56.9 prior. But the real story, of course, was the US PMI from ISM, which came in at 56.3 vs 52.8 expected vs 55.5 prior, sending risk surging all day from there. In my most recent pieces, I asserted that S&P 1040 marked an “interim cycle low” and that “risk would be bid in the near-term”. Sure enough, 1040 marked the low and the market surged almost 3% today to close right at its 55d. The four-month-long symmetric triangle is still in play and is approaching its apex by the day. The size of the pattern implies a 200-point move in the S&P upon breakout/breakdown, and with the apex around 1075, this gives bull/bear targets of 1275 & 875. I am bearish and have been looking for a selloff to summer 2009 lows as it is, and the confluence of those lows with the 875 target level is significant. In the near term, however, I think the market will continue to rally on the back of today’s bullish data. Friday’s NFP number could be a gamechanger, however, especially considering today’s ADP number was very bearish. I am looking for the S&P to challenge its 1100 S/R level, which is also at about its 200d, but if there’s some selling around there, that could mark the top. The charts will tell as we approach the apex. Although the Australian GDP figure was strong, the big consumption behind it means the household savings rate is now down to 1.5%. This could be an unsustainable development, as the entire Australian growth story seems to be leveraged into FIRE, with offshore funding replacing depleted domestic credit, a property market Grantham & Taylor call bubblicious, and the rest of the economy little more than a derivative of excess Chinese credit. Nevertheless, AUDUSD rallied strongly today, as the rising channel I’ve been pointing out remains intact and defining the trend well. AUDUSD may test August highs next, around 0.9200, which is where I expect it to find some selling. I’m bearish on AUD and will probably be looking to add to my short soon around 0.9200 and/or a breach of its channel support line. I initially shorted the cross at 0.9175, expecting to hold it through countertrend bounces into the fall decline I’m expecting, and the bounce it is currently experiencing is something I expected and wanted to hold short into and through. I have raised my stop in AUDUSD back up to 0.9225, by the way, as I’ve hedged my core short holdings, which means the thesis for my AUDUSD short is invalidated only on a breach through August highs. Besides the long equity positions I’ve been throwing on as a way to hedge my core short positions, I used the AUDJPY cross yesterday to express some additional short-term risk appetite. It paid off, as it took off today for almost 200 pips. I am holding this as an expression of my near-term outlook, which is at odds with my intermediate-term outlook expressed by my bearish positions. AUDJPY now sits right under its 55d, like its risk proxy counterpart S&P 500, and has a triangle pattern in the works. I expect it to rally onwards to about 78.00 if risk continues being bid, and if that is taken out (I don’t expect it to), June and August highs around 79.50 should provide some significant selling pressure. I think both of these levels could provide terrific short entries if my bearish outlooks play out. For now, however, I am long and holding, until near-term bullishness subsides. A similar triangle is developing in AUDCHF, and if the Franc suffers some near-term selling as Eurozone periphery spreads tighten on the back of renewed risk appetite, I might go short some CHFJPY (which is looking heavy on its chart as it approaches resistance) so my AUD long is funded in CHF and I can play the triangle in the AUDCHF chart. It remains to be seen how JPY & CHF will act in the near term. Another CHF cross I’m watching is GBPCHF, which broke down below its very long-term 1.58 S/R level yesterday, a trade I had been watching for a long time but admittedly missed. If strength is capped at that 1.58 level, I may short this cross in the near future. And speaking of GBP, I went short GBPAUD this morning as another way of getting some exposure to risk. In this instance, I used GBPAUD as a proxy to short vol, to which the cross has some significant correlation, as well as go long the China/Australia growth thesis against UK underperformance, characterized well today by the positive China PMI & Australia GDP data and the bearish UK PMI. After breaking down through its support trendline today, it sold off more than 200 pips to bring it to its lower levels since June. In the chart, there is a resistance trendline drawn as well. I would like to note that these two trendlines do not form a triangle together, in my opinion, as they represent two different ceilings/floors for two different timeframes. The support trendline associated with the resistance trednline drawn in already has not yet been defined by a second cycle low after May’s, and if a triangle is to develop, it has not yet in my opinion. Wheat prices are on the rise, as the correction from recent highs on the back of the Russian drought is basing into a descending triangle. I am still long ahead of an imminent breakout, but will be cutting losses below the 675 support level. The Dollar Index sold off from its 55d today as risk rallied, as the 38.2% Fibo level I’ve been mentioning (retracement of both November-June rally and June-August selloff) offered strong resistance. Next up could be a test of its 200d, also near its 50% Fibo level around 81.60, where it could find support and rally off of. To continue my theme of getting long risk in the near-term, I bought some shares in Jos. A. Bank (JOSB) today as the stock broke out of its triangle on heavy volume on the back of a great earnings release today sohwing a 32% increase in profits. Though I was a little late to the trade, I think JOSB could rally up to test April highs aroun $44 in the near future, as price and volume expand from its very bullish technical breakout. One of my longs, CMG, broke out on strong volume today, surging by about 5.7%. This is a very bullish development on a great looking chart and I expect more strength from here. The triangle from which it broke out implies a move to about $180. Cloud computing names also showed some strength today, as CRM had a 6% breakout on strong volume. VMW surged 4% on good volume, as well, and it appears coiling for an imminent breakout of its own. Both are bullish charts, and both are long positions I am holding, CRM from last week, VMW from today. USDCAD sold off today amid the risk appetite but the cross is currently developing a very large triangle pattern extending all the way back to last fall. This is an important cross to watch, particularly for commodities, and an eventual breakout could send it flying all the way back to last summer’s highs around 1.17, a good 1200 pips from current levels. For now, however, it is merely on my watch list. The last chart for today is a chart of the Russell 2000/S&P 500 ratio, as measured by their ETFs, IWM & SPY, respectively. The Russell is comprised of small- and mid-caps and is a much higher-beta index than the S&P 500. Because of this, the IWM/SPY ratio can be a good indicator of the prevalence of liquidity in the current market environment. It rallied today as risk was bid, but sits squarely in a descending channel originating from April. I will be watching for how this ratio reacts around its channel’s resistance trendline, as a breakout may force me to reassess my bearishness and consider continue follow-through to the upside. However, I expect IWM/SPY to remain trapped in its downtrending channel for now, albeit having countertrend bounces along the way, indicating declining liquidity and consequently risk appetite. OPEN TRADES NEW TRADES CLOSED TRADES If you would like to subscribe to Shadow Capitalism Daily Market Commentary, please email me at naufalsanaullah@gmail.com to be added to the mailing list. DISCLAIMER: Nothing contained anywhere in this commentary, including analysis and trade ideas, constitutes or should be construed as investing or financial advice, suggestion, or recommendation. Please consult a financial professional and do due diligence before engaging in any purchase or sale of securities.
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