Gold World News Flash |
- [Audio] King World News Interview: Ben Davies “The World Monetary Earthquake.”
- Hourly Action In Gold From Trader Dan
- 1099 Supply Shock for Small Coinage
- The One Man Who Will Make Bullion Sparkle
- Welcome to the Mania
- Silver at $22: Where To From Here?
- Gold Just Shy of Trendline
- Jim?s Mailbox
- LGMR: Gold Hits New Highs for US, Indian and Chinese Investors as QEII Gains Force
- LBMA 2010: Back to the Future
- Crude Oil Rises as U.S. Inventory Surplus Declines, Gold Notches Yet Another Record H
- Six Sound Reasons NOT to Buy Gold!
- Why Gold is Back in Vogue
- How to Profit From the Metal That's More Precious Than Gold
- Eurasian Minerals Responds to Bullion Monarch; Releases Drill Results
- The Comedic Value of Naked-Short Paper Gold
- Remobilize Gold To Save The World Economy!
- Mid-Week Market Report on SP500, Oil, Gold and Dollar
- Best September Since 1939: Review, End of Q3, 2010
- The FED Cannot Keep Stocks Up
- Attachment “G” is Too Dangerous to Be Seen
- Here’s The Problem – And Why Gold Will Go MUCH Higher…
- China Warns about the Dollar
- Gold Investing
- id Boy, id Girl
- Investing in Gold With a Watchful Eye On Mr. Market
- Gold Seeker Closing Report: Gold and Silver Fall Slightly
- U.S. Mint jacks up silver eagle premium by a third
- Bring on the Bernanke Put!
- Fed's corruption through selective leaks of inside information exposed by Reuters
- Fed's corruption through selective leaks of inside information exposed by Reuters
- Turk sees silver at $23 and gold at $1,335 within hours
- Handling your hoard?
- Noting GATA, Forbes asks: Is your gold safe in an ETF?
- The Raid on Gold and Silver foiled...Sept 30.2010
- Caisse Getting Ready for the Next Big Move?
- Silver Shines as an Economic Solution
| [Audio] King World News Interview: Ben Davies “The World Monetary Earthquake.” Posted: 01 Oct 2010 02:28 AM PDT Ben Davies is CEO of Hinde Capital - Rising Star Ben Davies gives a tremendous interview regarding his brand new blog piece exclusively for KWN titled, "The World Monetary Earthquake." Ben lays out the case for why the revaluation of the Chinese currency can lead to a collapse of currencies.
|
| Hourly Action In Gold From Trader Dan Posted: 30 Sep 2010 06:49 PM PDT View the original post at jsmineset.com... September 30, 2010 10:37 AM Dear CIGAs, It was a rather strange day today in the commodity world with the Dollar seeing a bit of a bounce but with crude oil breaking an upside resistance level even as a goodly portion of the rest of the commodity complex was experiencing some hefty fund selling. The grains in particular were whacked by an unexpected and rather confusing USDA stocks report which sent corn and wheat sharply lower as a mass exodus of speculative fund longs occurred early in both markets. Sugar was slammed quite hard and even cotton did not seem to get much help from overnight news that China's cotton crop might be hit by some freezing weather. Palladium notched a 28 month high before it too saw a wave of selling surface. Gold and silver had set fresh highs in overnight trade with gold hitting yet another all time record while silver too scored another 30 year high above $22.10. As the commodity selling wave hit during the US s...
|
| 1099 Supply Shock for Small Coinage Posted: 30 Sep 2010 06:49 PM PDT The 1099 reform in the health care bill passed by Congress and signed by the President has turned the physical gold market upside down. Under the new law, gold buyers and sellers will have to fill out a 1099 on each side of the transaction if the sales price is greater than $600. As a result, many investors who have been buying gold as an anonymous way to protect their wealth are now feeling the heat. The Economics of the 1099 Just months after passage, the Senate has already moved to remove the 1099 requirement from the health care bill in an effort to reduce transaction and accounting costs for small businesses. With many companies processing far larger orders than $600 on a near daily basis, it is certain that new regulation will prove to be time consuming and costly. Just today, the Wall Street Journal reported that in 2008, regulations cost businesses more than $1.7 trillion. This new regulation, one which virtually no business can avoid, will only add...
|
| The One Man Who Will Make Bullion Sparkle Posted: 30 Sep 2010 06:49 PM PDT Thomas Geissler is a bullion entrepreneur in his own right. His creation, the Gold to Go company, specializes in gold vending machines. These machines are currently in use in Europe and the Middle East to deliver gold to consumers in a number of high end hotels. After apparent success, these new gold vending products will soon come to the United States and help create the next generation of bullion investors. Golden Success The Gold to Go brand will be bringing their automatic gold vending machines to the United States by the end of 2010, and with it, they will bring hundreds of thousands, if not millions, of people into the gold and silver buying business. Remember that first time you purchased or were given metals? That time when you first held them in your hand? You might have knocked them together to make that trademark ringing noise, or maybe you just stared at their beauty. But admit it: it was from that day on that you were hooked into buying preciou...
|
| Posted: 30 Sep 2010 06:48 PM PDT By Jeff Clark, Senior Editor, Casey's Gold & Resource Report With gold punching the $1,300 mark, thoughts of what a gold mania will be like crossed my mind. If we're right about the future of precious metals, a gold rush of historic proportions lies ahead of us. Have you thought about how a mania might affect you? Not like this, you haven't You log on to your brokerage account for the third time that day and see your precious metal portfolio has doubled from last week. Gold and silver stocks have been screaming upward for weeks. Everyone around you is panicking from runaway inflation and desperate to get their hands on any form of gold or silver. It's exhilarating and frightening in the same breath. Welcome to the mania. Daily gains of 20% in gold and silver producers become common, even expected. Valuations have been thrown out the window – this is no time for models and charts and analysis. It's not greed; it's survival. Get what you can, while you ...
|
| Silver at $22: Where To From Here? Posted: 30 Sep 2010 06:48 PM PDT The SLV ETF adds another million ounces. Gold on display [and for sale] at Russia's Sber Bank.World according to gold: here comes Tokyo Rose. A World Monetary Earthquake is coming... and much more. " Yesterday In Gold And Silver The gold price didn't do much of anything anywhere on Planet Earth on Wednesday. The high of the day [such as it was... around $1,314 spot] occurred shortly after London opened for business at 8:00 a.m. local time... which is 3:00 a.m. Eastern. The low [around $1,306 spot] was at the London a.m. gold fix two and a half hours after that. Like it almost always does, the silver chart for Wednesday looked pretty much the same as the gold chart... with silver's daily highs and lows occurring at the same times as gold's. Nothing to see here, either, folks. The world's reserve currency didn't do much of anything either during the Wednesday trading session... and has leveled off around 78.8 for the moment. Just like the go...
|
| Posted: 30 Sep 2010 06:48 PM PDT courtesy of DailyFX.com September 30, 2010 06:31 AM Daily Bars Prepared by Jamie Saettele Sights remains on round figures such as 1300, 1400, 1500, etc. Watch channel resistance going forward. The line is at 1327 today and increases about $3 a day. Of note are the blue colored bars on the chart. These bars indicates an RSI that is above 75. This happened back in November 2009 and May. In both instances, Gold continued higher (slightly) before reversing....
|
| Posted: 30 Sep 2010 06:48 PM PDT View the original post at jsmineset.com... September 30, 2010 07:47 AM Dear LT, As you said many times before, Volcker won it for the USA and Bernanke gave it all away! Best, Bt Philip Manduca Says There Has Never Been An Empire So Willing To Give Its Wealth And Power Away Like America Gregory White | Sep. 29, 2010, 4:23 PM Philip Manduca of ECU Group spoke to CNBC this afternoon about the dollar’s decline, the rise in gold, and the failure in decision making by the U.S. government. 0:30 There has been a covering up of the cracks in the EU. They will resurface in 2011 because the problem of a lack of fiscal union in a monetary union persists. Growth will not rise to the point where tax revenues will be high enough to combat deficits. 1:15 Money push, QE, is what is being priced in. There’s loads of money out there, that’s not the problem. When everyone stops worrying about this, the focus will return to the eurozone. 2:00 The problem is not supp...
|
| LGMR: Gold Hits New Highs for US, Indian and Chinese Investors as QEII Gains Force Posted: 30 Sep 2010 06:48 PM PDT London Gold Market Report from Adrian Ash BullionVault 08:40 ET, Thurs 30 Sept. Gold Hits New Highs for US, Indian and Chinese Investors as QEII Gains "Forceful Advocate" THE PRICE OF WHOLESALEgold bullion touched yet another all-time high against the Dollar in London on Thursday, breaking $1315 an ounce as the US currency slid once more on the forex market before easing back. Investors buying gold today in India and China, the world's two top demand nations, also saw it breach new record highs, as did Canadian buyers. "Light selling emerged" in early Asian trade, according to a Hong Kong dealer, but for Dollar gold buyers "the trend remains higher" says Russell Browne at bullion-bank Scotia Mocatta, setting a "technical target" at $1369 with support now raised to $1284."Medium-term, the...$1400 region will remain our upside target," says the latest weekly report from Commerzbank analyst Axel Rudolph.Edging back however from 3-month highs above £830 per ounce vs. ...
|
| Posted: 30 Sep 2010 06:48 PM PDT by Adrian Ash BullionVault Thursday, 30 September 2010 "Haven't we seen this before, in 1923...?" The BIG MONEY flows from the biggest trends, of course. But even the brightest people, and with the best of intentions, can struggle to see today what hindsight will say you could have banked on. By the summer of 1922, for instance, you needed 100 of Germany's paper Marks to buy one gold coin Mark, against which they were supposed to be equal. Yet the German Chancellor "would [still] accept no connection between the printing of money and its depreciation," notes Adam Ferguson in When Money Dies (London, 1975)...even as the Weimar Republic's hyperinflation pushed Berlin food prices well over 50% higher inside one month. Indeed, "the opinion that the flood of paper is the real origin of the depreciation [in its purchasing power] is not only wrong but dangerously wrong," said the Vossische Zeitung newspaper. So by the time the worthless currency was abandoned 14 months...
|
| Crude Oil Rises as U.S. Inventory Surplus Declines, Gold Notches Yet Another Record H Posted: 30 Sep 2010 06:48 PM PDT courtesy of DailyFX.com September 29, 2010 10:51 PM A surprise decline in U.S. inventories was the only excuse crude oil needed to rally strongly on Wednesday, while gold didn’t need any excuse to notch yet another record high. Commodities – Energy Crude Oil Rises as U.S. Inventory Surplus Declines Crude Oil (WTI) - $77.71 // $0.15 // 0.19% Commentary: Crude oil reached the highest level since the middle of August on Wednesday, as the commodity advanced $1.68, or 2.21%. The catalyst seemed to be the weekly U.S. government inventory report which showed that crude oil inventories fell by 0.5 million barrels, gasoline inventories fell by 3.5 million barrels, distillate inventories fell by 1.3 million barrels, and total petroleum inventories fell by 5.1 million barrels. These figures were significantly more bullish than the 5-year average, which enabled the total petroleum surplus to decline from 110.8 million barrels in the prior week to 105.7 million barrels. Never...
|
| Six Sound Reasons NOT to Buy Gold! Posted: 30 Sep 2010 06:44 PM PDT One investment is touted as the cure all for incompetent governmental economic mismanagement, heightened risks of war, threats of rampant inflation, and depreciating currency. That investment is making new highs every day. That investment is gold. Should you succumb? No, and here are six reasons why! Words: 1269
|
| Posted: 30 Sep 2010 06:44 PM PDT Gold is back in vogue. After spending much of the past three decades in the doldrums, gold is stirring and is generating great interest. Investors can be persuaded to buy equities, property and bonds without much convincing... [but] gold is different. They need to be convinced as to why they should own a precious metal that has little apparent utility. [Below we] will explain why owning gold is not only a prudent and intelligent idea, but that it is imperative to protect oneself through the most extreme uncertainty we have faced for generations. Words: 2101
|
| How to Profit From the Metal That's More Precious Than Gold Posted: 30 Sep 2010 06:26 PM PDT Martin Hutchinson submits: Gold set another new record Wednesday, closing above $1,300 an ounce for the second-straight day. The London Bullion Market Association - at its annual conference this week - projected that the "yellow metal" would advance to $1,450 in the next year. Complete Story »
|
| Eurasian Minerals Responds to Bullion Monarch; Releases Drill Results Posted: 30 Sep 2010 06:05 PM PDT The Indicative Proposal was not accepted by Bullion and expired in accordance with its terms on August 10, 2010. No due diligence review of Bullion was undertaken. Eurasian confirms that it is not currently in discussions with Bullion, and there is no outstanding offer by Eurasian for the shares of Bullion.
|
| The Comedic Value of Naked-Short Paper Gold Posted: 30 Sep 2010 06:02 PM PDT And how does this "naked-short paper gold" thing work? Perhaps best explained by example, imagine Apu, famously of the Kwik-E-Mart of The Simpsons TV show. The scene opens with the doors of the convenience mart opening, and in walks some nice, trusting guy, to whom Apu says, "Hello, sir! How may I be of service today, valued customer? A Double-Blast Raspberry Squishee, perhaps?"
|
| Remobilize Gold To Save The World Economy! Posted: 30 Sep 2010 06:00 PM PDT
|
| Mid-Week Market Report on SP500, Oil, Gold and Dollar Posted: 30 Sep 2010 05:38 PM PDT
|
| Best September Since 1939: Review, End of Q3, 2010 Posted: 30 Sep 2010 05:12 PM PDT Everyone having fun yet? Holy mother of god that was a wild third quarter. The market teetered on the brink of complete collapse, twice, and ended above a very important resistance level after surging to the finish line. There were chances to both make and lose a lot of money this quarter. Technically, it wasn’t a tough quarter to trade based on the price action. Sentiment wise, the quarter started out horribly, got way too bullish at the beginning of August, and then stayed bearish to agnostic through the end of quarter rally as we climbed back over the SPX 1,130 level. It was the best September since 1939. An important psychological shift took place in the third quarter as well at the beginning of September when the market failed to react negatively to economic data that was far from positive. (click to enlarge)
Complete Story »
|
| Posted: 30 Sep 2010 04:52 PM PDT What the future will hold is such a dramatic sharp burst to astonishing new price levels of several thousands of dollars. This does not even require hyperinflation. It is not likely that the United States would enter a hyperinflation mode. The system would collapse long before that takes place. The much more likely result will be a complete currency default with a replacement of a new currency. This is one way government defaults by using a shell game so that the average person does not understand he was just taken to the cleaners. - Martin A. Armstrong on Gold The FED Cannot Keep Stocks Up What a difference a month makes. As I prepared to begin my Labor Day weekend in late August the financial media was abuzz with predictions of stock market doom. You could barely read anything without being confronted with several references to the dreaded Hindenberg Omen and how the appearance of several of these had all but guaranteed an imminent stock market collapse. There were plenty of reasons to be bearish. The market performed horribly in August and the economy was clearly still in the dumps despite a continued endless propaganda to the contrary. Nevertheless, the constant predictions of doom was indeed a great contrary indicator and barring some monster reversal today we are about to finished the month of September +10% in what is typically the worst month for stocks. It is set to be the best September in 70 years. The truth of the matter is while the relentlessness and strength of the rally did surprise me a bit the fact that we bounced hard did not. Ironically, the reason I thought this could happen is because I am SO bearish. At the end of the day, if you are coming from the angle that I am you need to assume the stock market is a political tool for those in charge. I have said this time and time again. 
|
| Attachment “G” is Too Dangerous to Be Seen Posted: 30 Sep 2010 04:38 PM PDT There may be a simple economic explanation for the best September on Wall Street in 71 years. No double dip recession...improving labour market numbers...rebounding house prices. Except none of that is true. So what is left? Well, as near as we can tell, everyone seems to be front running central banks. Is the Fed buying stocks? Not yet. But if it's committed to some form of Quantitative Easing, it looks like investors have gambled that this will support stock prices (and commodity prices too), even if it doesn't (and can't) reverse the long process of household deleveraging in the U.S. economy. It sure was an entertaining month, though. In the September issue of the Australian Wealth Gameplan, we highlighted the risk of D2 (shorthand for "The Second Great Depression".) It should have been obvious that throwing down the gauntlet about the social and economic crisis ahead would precede a record month on Wall Street. At least we got gold right. Now, though, you have to wonder what happens next. Overnight we learned that the cost of bailing out Ireland's Anglo Irish bank is a whopping €34 billion. That's 32% of Ireland's GDP, which is another way of saying that Ireland's government doesn't have the resources to do the job. Which is another way of saying that the European Central Bank must do it. The ECB doesn't have the money either. But it does have a license to print money. And that should do the trick - even if it means weakening the Euro. The European debt problems have not really gone away. They just went to ground over the Northern Hemisphere summer, or were buried under a truckload of indifference and wishful thinking. However we've yet to see any large funds or banks take a write-down on the value of their sovereign bonds. Give it time. And in the meantime, keep an eye on social tensions in Europe. If Ireland tries to bailout Anglo on its own, it will mean more spending cuts. But as you'll see, people don't take kindly to having their standards of living reduced in order to bail out banks. Mind you the expectation that the government can keep spending money it doesn't have to achieve a socially compassionate society is at odds with a little word called reality. But people will eventually adapt, the easy way or the hard way. As an investor, adaptation to a world of massive quantitative easing by central banks is a risky proposition. It means becoming a speculator and surfing asset prices higher on the liquidity wave. But that isn't really investing. It's just going along to get along. Hey! Was that the sound of a key plank being kicked out from underneath the rickety argument of Australia's housing bulls? Yesterday's Age reports that the country's net immigration slumped by 37% in the March quarter. Immigration and population growth has been held up by the housing bulls as an irresistible force behind higher house prices. But the immovable object here is that immigration - like interest rates - is variable. That means it changes. It can go down as well as up (or rates can go up as well as down). Population growth fell by 15%. Granted, the slump in national house prices for the quarter was mild, just 1.2% according to industry data. This is reportedly a "soft landing" that moderates house prices and is not unexpected given the Reserve Bank's rate rises. At least that's the mainstream story. But the clowns in the industry have no imagination. In addition to talking their own book, they refuse to recognise that Australia's house price boom was inflated with money borrowed abroad. That dynamic puts Aussie households at dangerous levels of mortgage debt and makes the Aussie banks doubly vulnerable to falling house prices and/or a foreign lending crunch. Don't take our word for it. The Treasury warned the incoming Labour government of it in its "Red Book." This kind of document is true testament to the unexamined faith in central planning and the power of bureaucracy to regulate life for the good. It's also given that title without any sense of irony. You'll find that there's a lot missing from the Red Book. There are obviously some things too valuable or important for you to know as an Australian citizen. In fact, if you check the table of contents, there's a whole "attachment" to the book - Attachment G - that's been entirely redacted. What it's about...who wrote it...and what it said...have all been completely erased from the public version of the document. Below, you can see the redacted table of contents and then the utterly redacted "Attachment G."   "Attachment G" could be anything from how an emissions trading scheme or carbon price will raise the retail price of energy and cripple Australia's industrial economy to the necessity for massive new fiscal stimulus in case of a second phase of the Global Financial Crisis. But we prefer to believe it's about Australia's housing market and the dependence on foreign lending. Mind you this is utter speculation. But there is a section in the "Red Book" on housing, with the critical passages redacted from public view. You'll find it below: What did the Treasury say about Aussie banks and Aussie housing that's so dangerous/important that you're not allowed to know? Well, probably nothing you don't already know. But probably something the Treasury doesn't even want to admit it's considering. Shocking. Truly shocking. Dan Denning
|
| Here’s The Problem – And Why Gold Will Go MUCH Higher… Posted: 30 Sep 2010 04:23 PM PDT "Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values." - Atlas Shrugged August 15, 1971. That date should be etched in everyone's mind and it should be tattooed on the forehead of ass-absolutes like "Mish," Prechter, Denninger and every other imbecilic deflationista out there. Here's the chart, which I took from the free access to Nick Laird's http://www.sharelynx.com/ and added the two date-markers:  This is the key to the understanding the root cause of the collapse of the United States – economically, politically, morally, spiritually. The Bretton Woods agreement in 1944 established the U.S. dollar as the world reserve currency. The proviso was that all U.S. debt obligations were to be backed 1:1 with the gold owned by the United States. While this was only a partial currency anchor, you can see that from 1944 – 1971, the amount of Treasury debt outstanding barely increased. Then, on August 15, 1971, all hell breaks loose. The terms of BW allowed foreign sovereign holders of U.S. debt to exchange that paper for gold at the Fed "window." The U.S., in order to pay for the largesse of 8 years of Democratic socialist programs and Viet Nam, had issued a lot more paper to foreigners than was backed by gold in Ft. Knox. Charles deGaulle had figured this out and decided to turn in all of the U.S. debt held by France in exchange for gold. Nixon had no choice but to close the gold window or risk an unmanageable political and economic crisis: it prevented a run on gold that U.S. did not have. Wars are started over issues like this. For whatever reason for which I have yet to find a plausible explanation, the rest of the world accepted this U.S. Government default under Bretton Woods and continued to accept the U.S. dollar as the global reserve currency. The only thing I can think of is that at the time the U.S. was by far the strongest economy, had military presence in close to 200 countries and by far had the most nukes to fling. Now, if I were to dig up a long-term chart of M3 thru March 2006 and extended it with M2 + assumptions thru today, you would see a similar chart pattern to the one in the Treasury debt chart above. Serious price inflation is percolating in the system and will soon be felt by everyone. And now our system is mired in an irreversible debt/death spiral. At some point our Asian/Anglo financiers will say "NO MAS" and then we'll really see the meaning of Bernanke's infamous "helicopter" speech. The Fed will have no choice but to hyperinflate the money supply in order to fund the Government and keep our system from collapsing. I'm not sure where Bernanke is coming from, because for a supposedly educated PhD economics expert, he sure is ignorant. I guess the joke's on us… Richard Nixon and every subsequent President, Arthur Burns, G. William Miller, Paul Volker, Alan Greenspan and now Helicopter Ben Bernanke are ALL destroyers of money. Do you know where your gold is? Source: http://truthingold.blogspot.com/2010/09/heres-problem-and-why-gold-will-go-much.html
|
| Posted: 30 Sep 2010 04:21 PM PDT China Warns About The Dollar(I know a lot of you saw this article already, but I am compelled to add my 2 cents, especially since the reader who has incessantly busted my stones over my bearish dollar call has disappeared) When China speaks, the U.S. should listen:
Here's the link if you have not seen the article by now: LINK This guy also goes on to say that "China should reduce its holdings of U.S.-dollar assets to diversify risks of 'sharp depreciation…'" Essentially this is a statement telling the world that continued support of the U.S. dollar by China will be limited at best. Translation: the dollar is going a lot lower. Make no mistake about it, even though the comment above came from "a former advisor to China's central bank," when the Chinese Government wants to make a policy statement, it's usually done through "representatives" like this. As per the graph below, you can see that the dollar has broken a head-and-shoulders chart formation, which usually implies much lower price levels are to be expected:  (click on chart to enlarge) To be sure, the dollar is technically a bit "oversold" and can bounce at any time. But the weekly chart is not reflecting an oversold condition, which means any corrective "bounce" will be brief. Of course, this also means that gold and silver will going much higher. Got any?
|
| Posted: 30 Sep 2010 04:19 PM PDT Since I am often asked by people how to invest in this gold bull market, I wanted to take some time to address these questions in a post. My main focus as an investor isn't worrying about choosing between gold juniors, gold seniors, physical gold, or other minor aspects of gold investing. My primary concern is knowing that I am investing in the right asset class. If you pick the right horse, the profits will take care of themselves. I've noticed over the years that investors have an irrational fear of taking drawdowns. Now let me ask you something: If you think gold is going to at least $2,000, why do you care if you buy at $1260, only to see gold drop to $1200? I never knew there was some kind of award for timing moves perfectly. In the long run, it makes no difference whatsoever. I personally think we are due for a correction in gold. A correction to $1240-$1260 is reasonable in my opinion. Now this doesn't mean I am going to sell any of my positions; it simply means this is a price level I would consider adding at. If the correction doesn't arrive and gold shoots straight to $1500, do you think I care? I'll be dancing on the streets. I have my core position intact and I won't sell until economic conditions materially change. I know the average person gets perturbed when their investments don't rise the exact moment they buy. Most people pay lip service to a "long-term" approach to investing, but the long-term approach to investing for them usually means ignoring losses because they don't want to recognize them. As for gains. they take them as soon as possible to offset losses. This is honestly how the average person invests. The way I think is on a truly long-term time horizon. I really don't care about short-term drawdowns if it allows me to build a big position. I'm not scared of timing mistakes because you know what? Every single timing mistake I have made has been forgiven because I bought into a bull market. Gold will have to do what every other asset does in a bull market: It will have to undergo a paradigm shift. That paradigm shift has yet to arrive because people are still fighting this move. There is a direct correlation between investor sentiment and dynamic price movements. When there are no more corrections in gold, that's when I am going to start getting nervous. This type of price action will indicate that the public is starting to get involved. Now take a look at the charts of gold since last December. This is what has essentially happened: Rally, pullback, consolidation. Rally, pullback, consolidation. Now tell me, how the heck is this a bubble? This is normal bullish price action if I ever saw it.
Just ask yourself these questions: Do you believe gold is in a secular bull market? Is more quantitative easing ahead? Is our economy improving or deteriorating? Is confidence rising or falling? Go to the root of the problem instead of over-complicating things. What people don't realize is that there is real beauty and genius in simplicity. If you can't explain things in a simple manner, chances are, you don't know what the hell you are talking about. Let me give you one example. Many of you are aware of Fed economist Kartik Athreya's critique of economics bloggers. If you haven't read his piece, you should take a look- it's pretty hilarious. Apparently Athreya believes economics is so damn complicated that you need a PhD to understand it. This is such a joke of a comment that I don't know if it is worth addressing. Anyway, here is a brief excerpt from his little diatribe:
So what did this guy say in his elegant little essay? Markets are dynamic. Everything else he said was fluff. Is it any wonder then that this economist at the Federal Reserve didn't warn us about the financial crisis? Am I the only one who sees the irony in his little rant? Apparently there are people who understand economics a lot better than our financial leaders, and that is at the core of the problem we face today. Our leaders are too arrogant to listen to us little peasants. What a shame. Anyway, I assume most of you aren't enamored by fancy titles and are more concerned with tangible track records. So let me tell you, if you want to actually crush markets, you have to use the energy of the market to your advantage instead of imposing your views on the tape. I've seen it over and over again: people get fixated on expecting a certain event, and this is what loses them profits. Think back to the correction in February. Most people were devising a master plan about buying gold when it hit $900. Gold then corrected to only $1040 before zooming straight up. From an expected value viewpoint, you should be buying every dip in a bull market instead of scrimping on a couple of dollars. In the long run, you will be fine. A lot of people are expecting weakness in the stock market to bring down gold stocks. They are expecting a repeat of November 2008. I honestly think we will not see a correction of that kind again in this bull market. 2008 was the time to add to gold stocks when it wasn't popular. Now, even the village idiot can pull a chart and see what happened in 2008 and mechanically wait for that event to repeat so they can buy. This is not how markets work though- you rarely get a chance to amend your errors so easily. While we probably will see many 20% corrections in gold stocks, the 90% collapses are likely behind us. The Value Approach to Gold Investing Most investors should be aware of Benjamin Graham's approach to value investing. Basically Graham invested in companies whose liquidation value was greater than their market capitalization. This approach is far better than most blind approaches to investing, but it is still flawed in many ways. One of the obvious flaws is that assets will not necessarily sell for the price it is carried in your books. This approach also doesn't account for flawed and deteriorating business models. Warren Buffett was a disciple of Graham and took his approach to value investing to the next level. Buffett, unlike Graham, had no problem investing in great companies at fair values. From a Graham perspective, you would probably not buy gold right now- the price is too high. But the fundamentals for gold are very bullish. This is an asset that is likely to outperform in the future. Buying at current prices isn't ideal, but you are buying a great asset at a fair price. Never assume anything about the markets. The natural inclination for people is to think markets are orderly and efficient. This is the kind of garbage that is taught in business school. Now is this true based on empirical observation? Let's see. Prior to a crash, do markets fall 0.1% day after day so everyone has ample warning to get out and preserve their capital? Do price and value converge gradually? Yeah right. Markets crash suddenly and wipe out investors who assume there is order in markets. The market is a dynamic beast. The coming move in gold will be a stock market crash in reverse. Do you think gold is going to rise steadily day after day, thereby allowing everyone to jump on board? No way. There will be a truly shocking dynamic move to the upside that very few will capture. You can see why I don't want to lose my position until then. Conclusion I keep on telling you that the most exciting times to be a gold investor are ahead. It is hard fror me to fathom some of the possibilities in gold. I hope that I have successfully drilled it into your head that you must be able to hold for the epic gains. This is what separates the men from the boys. I can tell you with a great deal of confidence that we won't have this kind of pervasive stupidity in our government for a long time, most likely generations. This is just one of those times in history when crazy stuff happens. A complete collapse of confidence is a rare event, but it is what's coming. There is not much else I can say. You either believe me or you don't. The truth will be crystal clear soon enough. Source: http://expectedreturnsblog.com/?p=1040
|
| Posted: 30 Sep 2010 04:10 PM PDT |
| Investing in Gold With a Watchful Eye On Mr. Market Posted: 30 Sep 2010 04:09 PM PDT What ho! The price of gold just keeps going up. It rose $2 again yesterday, to close at $1,310. The Dow fell 22 points. We've been waiting for a sell-off...for a downturn...for a resumption of the "risk off," fear-driven markets of 2008-2009. It should be coming. People are still unemployed. Stocks still aren't cheap. And houses are still getting cheaper. The latest Case-Shiller reading signals renewed weakness in the housing market. Prices are falling again. (More below...) How much farther will they go? Maybe 10% down. Maybe 20%. As we discovered on a recent trip to Florida, you can already get properties discounted 75% off their peaks. How much more is left? Probably not much on that one. But most houses are down only about 20%. They've got a ways to go. And stocks? We should see them selling at P/Es close to 5...not the 15- 20 that they're at today. So stocks have a long way to go too. But Mr. Market always has his tricks. What if he's preparing a run on the dollar...and a big blow-off in the gold market...BEFORE the sell- off in other assets? We expected stocks to go down...then, gold to go up. What if it happens the other way around? What if the final stage of the bull market in gold has already begun? What if investors and speculators begin to panic out of the dollar now? What if they sell the rumor of quantitative easing...rather than wait for the real thing? What if they drive the price of gold up to the moon, without giving us another chance to buy more at a lower price? Anything is possible. Mr. Market is a cagey, son of a gun. He could do anything. We wouldn't put it past him. Still, we wouldn't bet the farm on it either. Investment pros seem to be turning bullish on gold. "Gold forecast to hit $1,450 an ounce," says a headline in The Financial Times. That's the consensus view from the precious metals industry. "It's hard to be pessimistic about gold in the short term," said Kevin Crisp, chairman of the London Bullion Market Association. "At worst, you're neutral." We're seeing more and more bullish forecasts for gold. But so far, actual gold holdings by institutional investors attending the aforementioned LBMA conference are still tiny...less than 5% of their portfolios. As for individual investors, they've scarcely even heard of gold. Few own any at all. When they get on board - it will mean huge new demand for the metal. And there are the central banks. They have been net sellers of gold for many years. Typically, bankers are the worst investors in the world. They buy high and sell low. Someone should tip them off; that's not the way it's done. But they dumped beaucoup gold just as it was hitting all-time lows in 1998-99. And now that it's 5 times as expensive, they're beginning to buy again. When they really start buying, we'll know the game is over; it's time to get out of gold. But for the moment, they've barely begun. The biggest buyers will probably be the emerging economies. Why? Because they don't have much gold. China has only 1.6% of its reserves in gold, for example. And because they've got the paper cash to buy it. China could be a major buyer for 10-20 years...and still have a relatively small percentage of its reserves in gold. So could India. And Brazil. And Russia. So, maybe Crisp is right. Maybe it is hard to pessimistic. But so many people are so optimistic...we can't help but wonder: what's Mr. Market up to? What devious, devilish, infernal brew is he concocting? We're not pessimistic on gold. Far from it. We expect the price to go to $3,000...or $5,000 before this is over. But it bothers us that so many others think so too. It would be just like Mr. Market. Get the Johnny-come-latelies into gold. Whack them hard. Then, take gold much higher. And more thoughts... This just in, from The Washington Post:
*** Meanwhile, zombies are on the march. Literally. We got a news item from Europe. "Thousands of protestors took to the streets in dozens of European cities," it told us. What's their problem? They don't like cutbacks in government spending. And now Bloomberg tells us that the feds want to keep track of all money transfers into and out of the US: If you send $500 to your daughter in London, what business is it of the feds? Why do you ask, do you have something to hide? The feds say they are preventing terrorism and money laundering. What they are really doing is gaining power. It can't be too much longer before you need permission to send money overseas. And then, the "rich" will be fitted with the equivalent of an electronic ankle bracelet...to monitor their financial movements and prevent them from getting away with anything. But wait. Are we becoming paranoid? Are we having a bad dream? Are we "losing it"? Maybe. But soon, finances could be a matter of US national security. And transferring money out of the country, unauthorized, could be a crime. The zombies are counting on your money. They won't give it up without a fight. Regards, Bill Bonner,
|
| Gold Seeker Closing Report: Gold and Silver Fall Slightly Posted: 30 Sep 2010 04:00 PM PDT Gold rose to a new all-time high of $1315.68 at about 9AM EST before it fell to as low as $1295.90 by late morning in New York, but it then rallied back higher in the last couple of hours of trade and ended with a loss of just 0.08%. Silver climbed to a new 30-year high of $22.07 before it fell to as low as $21.532 and then also climbed back higher, but it still ended with a loss of 0.64%.
|
| U.S. Mint jacks up silver eagle premium by a third Posted: 30 Sep 2010 03:57 PM PDT 11:55p ET Thursday, September 30, 2010 Dear Friend of GATA and Gold (and Silver): Tarek Saab of Trusted Bullion in Minster, Ohio, reports that the U.S. Mint today increased its premium charge on U.S. silver eagle coins by 33 percent and that this has pushed up prices by 50 cents throughout the coin distribution system. You can find Saab's report here: http://www.trustedbullion.com/blog/item/252-us-mint-announces-33-price-i... CHRIS POWELL, Secretary/Treasurer 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 Join GATA here: 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 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
|
| Posted: 30 Sep 2010 03:47 PM PDT
It is now clear that the Fed’s unprecedented message last week implying that public enemy number was deflation, not inflation, has given a green light to global risk accumulation of every description. Any further slowdown in the economy will now be met with aggressive quantitative easing. Although I don’t spend vast amounts of time dissecting Fed statements, the words are unequivocal: "The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." Never was so much said by so few words. It is rare that everything goes up at once, but that is exactly what we got, with stocks, bonds, foreign currencies, commodities all rallying hard. Coming into the fall, I did have some concerns that asset classes that performed well over the summer, like emerging stock markets, precious metals, and the grains, might sell off on any American stock market strength, as managers rotate money from outperforming groups to laggards. It was not to be. On Friday, the 23 point leap in the S&P 500 was matched by gold punching through $1,300, silver hitting another 30 year high above $21, the grains tacking on 5%, and most emerging markets reaching either six month highs or all time highs. Who was not invited to this love fest? Financial stocks, where a weak housing market continues to wreak havoc with balance sheets, whether they publicly admit it or not. The US dollar was also missing in action, since any quantitative easing is certain to fan the inflationary fires down the road. The euro has blasted through to a multi month high, and the British pound is threatening the same. I warned readers that the markets were primed for a move like this (click here for “My Equity Scenario for the Rest of 2010” at http://www.madhedgefundtrader.com/september-1-2010-3.html ). All of the seasonal and historical indicators were predicting that in an election year like this one, six months of famine in the equity markets would then be followed by six months of feast. It looks like the S&P 500 now has a free pass to make a run to the 200 day moving average at 1,200, and possibly the high for the year at 1220. After that we’ll see how real this is, for stocks anyway. Party away like there’s no tomorrow, but keep an eye on the door as usual, and keep snugging up those stops on US equities. Use the strength in long dated Treasuries to unload what you still own. 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.
|
| Fed's corruption through selective leaks of inside information exposed by Reuters Posted: 30 Sep 2010 03:42 PM PDT The Ties That Bind at the Federal Reserve By Kristina Cooke, Pedro da Costa, and Emily Flitter http://www.reuters.com/article/idUSTRE68S01020100930 To the outside world, the Federal Reserve is an impenetrable fortress. But former employees and big investors are privy to some of its secrets -- and that access can be lucrative. On August 19, just nine days after the U.S. central bank surprised financial markets by deciding to buy more bonds to support a flagging economy, former Fed Governor Larry Meyer sent a note to clients of his consulting firm with a breakdown of the policy-setting meeting. The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public -- but only after a three-week lag. So Meyer's clients were provided with a glimpse into what the Fed was thinking well ahead of other investors. ... 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 Meyer's note cited the views of "most members" and "many members" as he detailed increasingly sharp divisions among the officials who determine the nation's monetary policy. The inside scoop, which explained how rising mortgage prepayments had prompted renewed central bank action, was simply too detailed to have come from anywhere but the Fed. A respected economist, Meyer charges clients around $75,000 for his product, which includes a popular forecasting service. He frequently shares his research with reporters, though he kept this note out of the public eye. Reuters obtained a copy from a market source. Meyer declined to comment for this story, as did the Federal Reserve. By necessity, the Fed spends a considerable amount of time talking to investment managers, bank economists, and market strategists. Doing so helps it gather intelligence about the market and the economy that is invaluable in informing the bank's decisions on borrowing costs and lending programs. But a Reuters investigation has found that the information flow sometimes goes both ways as Fed officials let their guard down with former colleagues and other close private sector contacts. This selective dissemination of information gives big investors a competitive edge in the market. In the past, Fed officials themselves have privately expressed discomfort about the cozy ties between the central bank and consultants to big investors, though their concerns have largely fallen on deaf ears. No one is accusing Meyer and his firm, Macroeconomic Advisers -- or any other purveyors of Fed insights for that matter -- of wrongdoing. They are not prohibited from sharing such information with their hedge fund and money manager clients. But critics question whether it is proper for Fed officials to parcel out details that have the potential to move markets around the world, especially with the government's involvement in the economy being so pronounced. "It's certainly not what Fed officials should be doing," said Alice Rivlin, a former Fed governor and now a fellow at the Brookings Institute think tank. "The rules when I was there were that you don't talk to anybody about anything that could be used for commercial purposes." In an effort to counter concerns about close ties between business and government, U.S. President Barack Obama issued an "ethics pledge" that forbids appointees of his administration from contacting the agencies they worked under for at least two years after leaving. But such measures are tough to enforce. And in the case of the Fed's Washington-based board, governors are allowed to transition directly into a banking sector job immediately after they leave the central bank, though they must first serve out a rather lengthy 14-year term, which many do not. Against the backdrop of today's shaky recovery and the Fed's efforts to provide ongoing support to growth, information about what central bank officials agree or disagree on can be even more valuable than usual. Haag Sherman, chief investment officer of Salient Partners, a Houston-based money management firm that oversees around $8 billion in assets, says even the slightest hint of the possible direction of policy can give investors a huge leg up. "The fact is that government today is driving the markets more than any time in recent history and having insight into near-term and long-term plans provides a money manager with a significant competitive advantage," Sherman said. Markets have been particularly sensitive to Fed policy in recent months as renewed weakness in the economy sparked widespread speculation that the central bank would try to ease borrowing conditions further, probably by ramping up its purchases of U.S. government bonds. By adding to the over $1.7 trillion in such purchases undertaken in response to the financial crisis so far, the Federal Reserve would be providing further incentives for banks to lend and consumers to borrow -- despite the fact that official interest rates are already effectively at zero. In his note, Meyer said many Fed officials hadn't found out about the pace of mortgage prepayments -- which meant the central bank's support for the economy was ebbing -- until just before the August 10 meeting. "For a few members, it was too late to affect their decisions; for others it was a very important factor, even the most influential factor," wrote Meyer. "Shouldn't the FOMC at least have a neutral balance sheet policy given the weaker outlook? This was obvious to the doves, persuasive to the center, but not the hawks." Fed-watching, of course, has long been a cottage industry, albeit a fairly wealthy one. Investors are constantly looking for clues about what officials may or may not be thinking, parsing their language much like Kremlinologists of yore. And markets can jump at the first whiff of a change in tone. For example, five days after Meyer's note, The Wall Street Journal published a more detailed account of the divisions on the Fed's policy-setting committee. The newspaper report was credited with moving bond yields 0.20 percentage point, a relatively steep decrease. Small wonder that large funds are willing to shell out tens of thousands of dollars a year to receive "color" -- as investors refer to the useful tidbits that plugged-in consultants supply. The precise number of former Federal Reserve employees tapping their network of old colleagues can't be determined, but by most accounts they are a sizable group. "The revolving door between the Fed and the private financial sector is quite significant," said Timothy Canova, professor of international economic law at Chapman University School of Law in Orange, California. There is no required registration process for economic and monetary policy consultants, former Fed lawyers say. Some especially high-profile former Fed officials now have their own shops too: Former Fed Chairman Alan Greenspan's Greenspan Associates offers policy consulting to Pimco, the world's biggest bond fund. Though rarer, access is sometimes also bestowed upon outsiders. Paul Markowski, a China expert who counts hedge funds and foreign central banks among his consulting clients, has never worked at the Fed but says his relationships with officials there date back to the 1960s. For him, he says, it's a question of knowing the individuals on the committee well enough to understand their sometimes cryptic signals. "You have to establish a relationship over time. If you go and see someone once or twice you are not going to be able to read what they are saying to you properly," he said. "They look at me, for one, as someone who has deep relations with the financial markets. It's a two-way street." On the same day as the Fed's eventful August meeting, Markowski wrote to his clients: "While I thought they could hold off doing what they did, a senior Fed official told me that after measuring the risk of doing nothing they had little to lose and more to gain." On Friday, September 24, three days after the September 21 meeting, he described a string of conversations with "three big Feddies." Earlier in the year, just a day after the April 27-28 gathering, Markowski offered clients the type of material that, if true, went beyond anything even the minutes from the meeting would offer three weeks later: "I had two interesting phone conversations with senior Fed officials -- one last night and another this morning. What I heard was that going into the meeting the staff were split 50-50 as to the recommendation on rates; there were 6 members who favored some change in the asset sales issue and 3-4 who favored changing (the Fed's commitment to keep rates low for an extended period), with another 1-3 suggesting putting the change off to the next meeting." Of course, speaking to one or two officials at the central bank does not necessarily provide the full story, especially at a time when policymakers diverge on key issues such as the outlook for the economy and appropriate policy actions. Niche analysts may also have a vested interest in exaggerating the extent of their access -- it makes their offering all the more enticing. Some investors point out that markets are inherently volatile, and inklings into the broad contours of policy do not necessarily translate into an obvious short-term trading strategy. "Having this information from the Fed would be beneficial only if you understood what the effects of what the Fed is doing might be," said Joseph Calhoun, strategist at Alhambra Investments in Miami. Even those who seem to be in the know are not always right: both Meyer and Markowski called the August 10 meeting wrong, thinking the Fed would hold pat when it in fact chose to provide additional stimulus. But Canova, the Chapman law professor, says the immediate investment value of the information is not the main issue. For him, the backroom exchanges are part of a bigger problem of financial industry influence over economic decision-making. "This is one of many quid-pro-quos in a system of opaque subsidies," Canova said. "It seems to me naive to think private investors would routinely share proprietary information without any legal obligation or subpoena unless they were getting some tangible benefits in return." Over the past two decades the Fed has become much more transparent than it once was. In the 1990s it began releasing the results of its interest rate decisions and minutes of its policy meetings, as well as transcripts of those gatherings with a five-year lag. Yet as institutions go, the Fed is hardly a paragon of openness. Chairman Ben Bernanke seldom speaks to the press on the record. When he does, it is often during well-orchestrated, pre-vetted events. During the financial crisis, Fed lending to troubled financial institutions, including the infamous rescues of AIG and Bear Stearns, was done hurriedly and behind closed doors, fostering public suspicion and political ire. The Fed's opaque communications structure makes it easy for markets to misinterpret the rather terse policy statements released after each meeting, adding to the demand for kernels of wisdom about their decisions. The pitfalls of the Fed's communication strategy were highlighted by the August 10 meeting. Just a few weeks earlier, Bernanke had spent the bulk of his testimony to Congress discussing the central bank's eventual exit from its ultra-accomodative policies. And the Fed had done little to explain to markets the link between the economic outlook and the size of its balance sheet. For many investors, therefore, the policy pivot on August 10 -- the decision to buy more bonds -- came out of the blue. Markets broadly took the Fed's move as a significant shift toward more support for the economy. Some market participants also interpreted it as a sign the Fed was more worried about the economy than it was letting on. When its policymakers are on the same page, the Fed often has no trouble making its position known following its FOMC meetings. But when policymakers disagree, as has been the case recently, the cacophony of voices can merely confuse markets. That may be one reason Fed officials feel the need to help investors better understand the public statements they make. Other central banks around the world try to avoid such risks by taking a different approach. Some strip away some of the mystery around policy by stipulating a specific inflation target. The European Central Bank holds a press conference after its key meetings that gives its president, Jean-Claude Trichet, a chance to explain the reasoning behind its actions in a public forum. "If Bernanke can't stop the leaks, he ought to have a full press conference after the meeting. It's inappropriate for certain people to gain an advantage on information from the Fed," said Ernest Patrikis, a former No. 2 official at the Federal Reserve Bank of New York and now a partner at law firm White & Case. For the U.S. Federal Reserve, the willingness to share market-sensitive information may reflect the institution's history and culture. Critics have long argued that the central bank has been too close to the financial industry. The Fed was established in 1913, in part as a response to the panic of 1907, by bankers who wanted a lender of last resort to help prevent frequent runs on the nation's financial institutions. Bankers still serve on boards of directors of regional Fed banks and former Fed staffers are hotly sought after on Wall Street and in the investment community. Meyer founded his consulting firm, then called Laurence H. Meyer and Associates Ltd, before joining the Fed in 1996. When he left the Fed in 2002, he returned to his firm, now called Macroeconomic Advisers. Another example is Susan Bies, who retired from the Fed's board in 2007, and took a job on the board of Bank of America in 2009. A number of chief economists at top U.S. banks at some point have also held staff positions at the Fed. Going the other way, William Dudley, head of the powerful New York Federal Reserve Bank, was the chief economist at Goldman Sachs and a partner at the firm. Critics say this revolving door structure makes it difficult for Fed staffers to be disciplined in not inadvertently revealing too much in conversations with old colleagues and friends. Fed board staffers who retire even get to keep their pass for the central bank's building, which boasts fitness facilities, a barber and a dining room. Though their identification badges designate their "retired" status, they are not restricted to where they can go once inside the building -- even if they now work in the private sector. Nowhere is the sense of cliquish old-world camaraderie more evident than at the Fed's annual gathering for world central bankers in Jackson Hole, Wyoming. Receiving an invitation to the exclusive event is no small feat, and economists take pains to get themselves on the short list. Being there means face time with Fed officials in an informal setting -- and more importantly, a stamp of legitimacy that is difficult to put a price tag on. This year's conference, held in late August, featured not only panels on monetary policy and a string of speeches from leading central bankers and academics, but also an unusual evening excursion to watch a horse-whisperer tame a wild stallion. "Too often the Federal Reserve believes that rules do not apply to them," said Sherman at Salient Partners. "If we allow some to have access, then how are we different than those that follow 'crony capitalism' in the Third World?" * * * Join GATA here: 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
|
| Fed's corruption through selective leaks of inside information exposed by Reuters Posted: 30 Sep 2010 03:42 PM PDT The Ties That Bind at the Federal Reserve By Kristina Cooke, Pedro da Costa, and Emily Flitter http://www.reuters.com/article/idUSTRE68S01020100930 To the outside world, the Federal Reserve is an impenetrable fortress. But former employees and big investors are privy to some of its secrets -- and that access can be lucrative. On August 19, just nine days after the U.S. central bank surprised financial markets by deciding to buy more bonds to support a flagging economy, former Fed Governor Larry Meyer sent a note to clients of his consulting firm with a breakdown of the policy-setting meeting. The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public -- but only after a three-week lag. So Meyer's clients were provided with a glimpse into what the Fed was thinking well ahead of other investors. ... 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 Meyer's note cited the views of "most members" and "many members" as he detailed increasingly sharp divisions among the officials who determine the nation's monetary policy. The inside scoop, which explained how rising mortgage prepayments had prompted renewed central bank action, was simply too detailed to have come from anywhere but the Fed. A respected economist, Meyer charges clients around $75,000 for his product, which includes a popular forecasting service. He frequently shares his research with reporters, though he kept this note out of the public eye. Reuters obtained a copy from a market source. Meyer declined to comment for this story, as did the Federal Reserve. By necessity, the Fed spends a considerable amount of time talking to investment managers, bank economists, and market strategists. Doing so helps it gather intelligence about the market and the economy that is invaluable in informing the bank's decisions on borrowing costs and lending programs. But a Reuters investigation has found that the information flow sometimes goes both ways as Fed officials let their guard down with former colleagues and other close private sector contacts. This selective dissemination of information gives big investors a competitive edge in the market. In the past, Fed officials themselves have privately expressed discomfort about the cozy ties between the central bank and consultants to big investors, though their concerns have largely fallen on deaf ears. No one is accusing Meyer and his firm, Macroeconomic Advisers -- or any other purveyors of Fed insights for that matter -- of wrongdoing. They are not prohibited from sharing such information with their hedge fund and money manager clients. But critics question whether it is proper for Fed officials to parcel out details that have the potential to move markets around the world, especially with the government's involvement in the economy being so pronounced. "It's certainly not what Fed officials should be doing," said Alice Rivlin, a former Fed governor and now a fellow at the Brookings Institute think tank. "The rules when I was there were that you don't talk to anybody about anything that could be used for commercial purposes." In an effort to counter concerns about close ties between business and government, U.S. President Barack Obama issued an "ethics pledge" that forbids appointees of his administration from contacting the agencies they worked under for at least two years after leaving. But such measures are tough to enforce. And in the case of the Fed's Washington-based board, governors are allowed to transition directly into a banking sector job immediately after they leave the central bank, though they must first serve out a rather lengthy 14-year term, which many do not. Against the backdrop of today's shaky recovery and the Fed's efforts to provide ongoing support to growth, information about what central bank officials agree or disagree on can be even more valuable than usual. Haag Sherman, chief investment officer of Salient Partners, a Houston-based money management firm that oversees around $8 billion in assets, says even the slightest hint of the possible direction of policy can give investors a huge leg up. "The fact is that government today is driving the markets more than any time in recent history and having insight into near-term and long-term plans provides a money manager with a significant competitive advantage," Sherman said. Markets have been particularly sensitive to Fed policy in recent months as renewed weakness in the economy sparked widespread speculation that the central bank would try to ease borrowing conditions further, probably by ramping up its purchases of U.S. government bonds. By adding to the over $1.7 trillion in such purchases undertaken in response to the financial crisis so far, the Federal Reserve would be providing further incentives for banks to lend and consumers to borrow -- despite the fact that official interest rates are already effectively at zero. In his note, Meyer said many Fed officials hadn't found out about the pace of mortgage prepayments -- which meant the central bank's support for the economy was ebbing -- until just before the August 10 meeting. "For a few members, it was too late to affect their decisions; for others it was a very important factor, even the most influential factor," wrote Meyer. "Shouldn't the FOMC at least have a neutral balance sheet policy given the weaker outlook? This was obvious to the doves, persuasive to the center, but not the hawks." Fed-watching, of course, has long been a cottage industry, albeit a fairly wealthy one. Investors are constantly looking for clues about what officials may or may not be thinking, parsing their language much like Kremlinologists of yore. And markets can jump at the first whiff of a change in tone. For example, five days after Meyer's note, The Wall Street Journal published a more detailed account of the divisions on the Fed's policy-setting committee. The newspaper report was credited with moving bond yields 0.20 percentage point, a relatively steep decrease. Small wonder that large funds are willing to shell out tens of thousands of dollars a year to receive "color" -- as investors refer to the useful tidbits that plugged-in consultants supply. The precise number of former Federal Reserve employees tapping their network of old colleagues can't be determined, but by most accounts they are a sizable group. "The revolving door between the Fed and the private financial sector is quite significant," said Timothy Canova, professor of international economic law at Chapman University School of Law in Orange, California. There is no required registration process for economic and monetary policy consultants, former Fed lawyers say. Some especially high-profile former Fed officials now have their own shops too: Former Fed Chairman Alan Greenspan's Greenspan Associates offers policy consulting to Pimco, the world's biggest bond fund. Though rarer, access is sometimes also bestowed upon outsiders. Paul Markowski, a China expert who counts hedge funds and foreign central banks among his consulting clients, has never worked at the Fed but says his relationships with officials there date back to the 1960s. For him, he says, it's a question of knowing the individuals on the committee well enough to understand their sometimes cryptic signals. "You have to establish a relationship over time. If you go and see someone once or twice you are not going to be able to read what they are saying to you properly," he said. "They look at me, for one, as someone who has deep relations with the financial markets. It's a two-way street." On the same day as the Fed's eventful August meeting, Markowski wrote to his clients: "While I thought they could hold off doing what they did, a senior Fed official told me that after measuring the risk of doing nothing they had little to lose and more to gain." On Friday, September 24, three days after the September 21 meeting, he described a string of conversations with "three big Feddies." Earlier in the year, just a day after the April 27-28 gathering, Markowski offered clients the type of material that, if true, went beyond anything even the minutes from the meeting would offer three weeks later: "I had two interesting phone conversations with senior Fed officials -- one last night and another this morning. What I heard was that going into the meeting the staff were split 50-50 as to the recommendation on rates; there were 6 members who favored some change in the asset sales issue and 3-4 who favored changing (the Fed's commitment to keep rates low for an extended period), with another 1-3 suggesting putting the change off to the next meeting." Of course, speaking to one or two officials at the central bank does not necessarily provide the full story, especially at a time when policymakers diverge on key issues such as the outlook for the economy and appropriate policy actions. Niche analysts may also have a vested interest in exaggerating the extent of their access -- it makes their offering all the more enticing. Some investors point out that markets are inherently volatile, and inklings into the broad contours of policy do not necessarily translate into an obvious short-term trading strategy. "Having this information from the Fed would be beneficial only if you understood what the effects of what the Fed is doing might be," said Joseph Calhoun, strategist at Alhambra Investments in Miami. Even those who seem to be in the know are not always right: both Meyer and Markowski called the August 10 meeting wrong, thinking the Fed would hold pat when it in fact chose to provide additional stimulus. But Canova, the Chapman law professor, says the immediate investment value of the information is not the main issue. For him, the backroom exchanges are part of a bigger problem of financial industry influence over economic decision-making. "This is one of many quid-pro-quos in a system of opaque subsidies," Canova said. "It seems to me naive to think private investors would routinely share proprietary information without any legal obligation or subpoena unless they were getting some tangible benefits in return." Over the past two decades the Fed has become much more transparent than it once was. In the 1990s it began releasing the results of its interest rate decisions and minutes of its policy meetings, as well as transcripts of those gatherings with a five-year lag. Yet as institutions go, the Fed is hardly a paragon of openness. Chairman Ben Bernanke seldom speaks to the press on the record. When he does, it is often during well-orchestrated, pre-vetted events. During the financial crisis, Fed lending to troubled financial institutions, including the infamous rescues of AIG and Bear Stearns, was done hurriedly and behind closed doors, fostering public suspicion and political ire. The Fed's opaque communications structure makes it easy for markets to misinterpret the rather terse policy statements released after each meeting, adding to the demand for kernels of wisdom about their decisions. The pitfalls of the Fed's communication strategy were highlighted by the August 10 meeting. Just a few weeks earlier, Bernanke had spent the bulk of his testimony to Congress discussing the central bank's eventual exit from its ultra-accomodative policies. And the Fed had done little to explain to markets the link between the economic outlook and the size of its balance sheet. For many investors, therefore, the policy pivot on August 10 -- the decision to buy more bonds -- came out of the blue. Markets broadly took the Fed's move as a significant shift toward more support for the economy. Some market participants also interpreted it as a sign the Fed was more worried about the economy than it was letting on. When its policymakers are on the same page, the Fed often has no trouble making its position known following its FOMC meetings. But when policymakers disagree, as has been the case recently, the cacophony of voices can merely confuse markets. That may be one reason Fed officials feel the need to help investors better understand the public statements they make. Other central banks around the world try to avoid such risks by taking a different approach. Some strip away some of the mystery around policy by stipulating a specific inflation target. The European Central Bank holds a press conference after its key meetings that gives its president, Jean-Claude Trichet, a chance to explain the reasoning behind its actions in a public forum. "If Bernanke can't stop the leaks, he ought to have a full press conference after the meeting. It's inappropriate for certain people to gain an advantage on information from the Fed," said Ernest Patrikis, a former No. 2 official at the Federal Reserve Bank of New York and now a partner at law firm White & Case. For the U.S. Federal Reserve, the willingness to share market-sensitive information may reflect the institution's history and culture. Critics have long argued that the central bank has been too close to the financial industry. The Fed was established in 1913, in part as a response to the panic of 1907, by bankers who wanted a lender of last resort to help prevent frequent runs on the nation's financial institutions. Bankers still serve on boards of directors of regional Fed banks and former Fed staffers are hotly sought after on Wall Street and in the investment community. Meyer founded his consulting firm, then called Laurence H. Meyer and Associates Ltd, before joining the Fed in 1996. When he left the Fed in 2002, he returned to his firm, now called Macroeconomic Advisers. Another example is Susan Bies, who retired from the Fed's board in 2007, and took a job on the board of Bank of America in 2009. A number of chief economists at top U.S. banks at some point have also held staff positions at the Fed. Going the other way, William Dudley, head of the powerful New York Federal Reserve Bank, was the chief economist at Goldman Sachs and a partner at the firm. Critics say this revolving door structure makes it difficult for Fed staffers to be disciplined in not inadvertently revealing too much in conversations with old colleagues and friends. Fed board staffers who retire even get to keep their pass for the central bank's building, which boasts fitness facilities, a barber and a dining room. Though their identification badges designate their "retired" status, they are not restricted to where they can go once inside the building -- even if they now work in the private sector. Nowhere is the sense of cliquish old-world camaraderie more evident than at the Fed's annual gathering for world central bankers in Jackson Hole, Wyoming. Receiving an invitation to the exclusive event is no small feat, and economists take pains to get themselves on the short list. Being there means face time with Fed officials in an informal setting -- and more importantly, a stamp of legitimacy that is difficult to put a price tag on. This year's conference, held in late August, featured not only panels on monetary policy and a string of speeches from leading central bankers and academics, but also an unusual evening excursion to watch a horse-whisperer tame a wild stallion. "Too often the Federal Reserve believes that rules do not apply to them," said Sherman at Salient Partners. "If we allow some to have access, then how are we different than those that follow 'crony capitalism' in the Third World?" * * * Join GATA here: 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
|
| Turk sees silver at $23 and gold at $1,335 within hours Posted: 30 Sep 2010 03:26 PM PDT 11:21p ET Thursday, September 30, 2010 Dear Friend of GATA and Gold (and Silver): GoldMoney founder and GATA consultant James Turk is widely quoted tonight. He tells Eric King at King World News that he expects to see silver at $23 and gold at $1,335 by the end of the week, which is, of course, tomorrow. You can read that at King World News here: And Turk tells MineWeb's Geoff Candy that gold will keep rising because the international financial system is broken and gold is liquidity that is no one else's liability. That interview is headlined "Broken System Could Lead to $1,800-$2,000 Gold This Year or Next -- Turk" and you can find it at MineWeb here: http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=112057&sn=Deta... CHRIS POWELL, Secretary/Treasurer 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 Join GATA here: 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 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
|
| Posted: 30 Sep 2010 03:08 PM PDT OK, being new at this how goes it on handling this stuff? I hear people saying to keep em sealed in airtites, use cotton gloves, and stuff like that. Assuming that we are talking bars, rounds, silver eagles and the like, no numismatic stuff, no proofs, just BU ASE's and such, will touching them with your bare hands mess them up or ruin their value? I have just silver now and am mainly interested in that, but would like to know about gold as well.
|
| Noting GATA, Forbes asks: Is your gold safe in an ETF? Posted: 30 Sep 2010 02:27 PM PDT Is Your Gold Bullion Safe In An ETF? By William Baldwin http://blogs.forbes.com/baldwin/2010/09/30/is-your-gold-bullion-safe-in-... What's hotter than the price of gold? Gold conspiracy theories. Conspiracy theorists say that the price is being manipulated, by central banks and big dealers, and that when the truth comes out the price of an ounce could go haywire -- say, to $3,000 or $5,000. The purported plots against gold loving investors are pretty convoluted. Among the possibilities: -- Many of the gold bars in vaults are fake, having been replaced with tungsten, a metal with a nearly identical density. -- Some of Uncle Sam's giant gold hoard may have gone missing. The bars have been either whisked out of Fort Knox by government agents or, more likely, pledged or traded away in derivative transactions involving other central banks. -- The banks that act as custodians for gold bullion funds are not to be trusted, because they have secret short positions in gold futures. ... 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 Some of this is borderline kooky. Some is almost plausible. Just what are the U.S. Treasury and the Federal Reserve up to with their gold reserves? No less a personage than U.S. Rep. Ron Paul, R-Texas, is demanding an outside audit of the Fed, in part to get an answer to this question. If you believe the official numbers, published by the World Gold Council, the U.S. government holds 8,133 metric tons worth $343 billion. The stash is divided among a number of sites: Fort Knox in Kentucky, an underground vault at the New York Federal Reserve Bank, a vault in West Point, N.Y., and storage bins at some federal mints. But that New York Fed vault also contains metal belonging to other nations. How do we know that the Fed hasn't traded away its gold reserves? That's the question being pointedly asked by something called the Gold Anti-Trust Action Committee (aka GATA). This little nonprofit (budget so far this year: $50,000 or so) is trying to fling open the doors of the secretive Federal Reserve with a Freedom of Information Act lawsuit seeking documents on gold swaps. So far, no dice. The Fed has asked the U.S. District Court for the District of Columbia to throw the suit out. GATA is the creature of long-time gold bugs William J. Murphy, 64, and Chris Powell, 60. Murphy, who was briefly a pro football player, runs a gold-watching site out of a Texas office. He estimates that he has 2,500 subscribers (at $299 a year) to lemetropolecafe.com. Powell has a day job as managing editor of the Manchester (Conn.) Journal Inquirer. The pair pay GATA's bills with contributions from individuals and smaller gold mining companies. Powell says that the big miners shy away from chipping in lest they offend the governments that control their mining permits. Powell's analysis of the gold market: The Fed is in cahoots with other central banks, such as the Bank of England, to "surreptitiously" depress the price of gold by selling from their stockpiles. Surely the motivation is there. If gold went to $5,000 an ounce, pounds and dollars would suddenly look rather worthless and the next thing might be a bout of hyperinflation. There's also no denying that the U.S. government's holdings are shrinking. The tonnage was three times as high at its peak in the mid-20th century. Even if this country still owns 8,133 tons unencumbered by any swap or other obligations, it could someday run out of ammunition with which to keep the value of a dollar propped up. All this talk of dark plots and secretive central banks plays into the hands of gold bullion vendors. These dealers in coins and bars compete with the exchange-traded gold funds like SPDR Gold Shares (GLD), which sell paper claims on trusts that hold gold in bank vaults. Of course, if you trust no one's paper, you take possession of the metal and put it under your bed, next to a shotgun. The problem with this approach lies in the transaction costs. Banks can trade gold bars back and forth with some efficiency because they have not just assaying equipment but paper trails detailing ownership of a bar from the moment it was cast by a member of the London Bullion Market Association. You don't have that when you waltz into a dealer looking to sell a 400-ounce brick. Coins can't be trusted either; fake gold of various sorts can be found on Ebay. Buy gold coins from a dealer and you'll pay a premium of 5% or more over the metal value, says William Rhind, who runs the U.S. marketing arm for ETF Securities, which offers a SPDR Gold competitor called ETFS Physical Swiss Gold Shares (SGOL). You'll also suffer a discount of 5% or more when you go to sell coins, he says. And of course you have to worry about whether the dealer slipped you a gilt-edged hunk of tungsten. Powell and Murphy don't like shares of any of the big ETFs. (The category, led in size by the SPDR product, also includes iShare's gold fund, ticker IAU.) What's not to like? Two things. One is that shares in these entities, which are organized as business trusts, entail only an indirect claim on a pile of gold. Unless you are a big brokerage firm, you don't have the right to take your shares to a teller window and get the metal in exchange. The other thing about the ETFs is that they use custodians like HSBC and JP Morgan Chase that are players in the wholesale gold market. Therein lies a potential conflict of interest with duty, says GATA. The Gatans prefer services like Bullionvault, an online venture that assigns you your own chunk of gold, stored in New York, Toronto, or Zurich. Rhind, for his part, pooh-poohs most of the GATA theory about collusive pricing in the gold market. He is selling into a different set of fears. You'll love his firm's product if you are uneasy about some of the newer and smaller players in the gold hoarding business. ETF Securities, founded in 2003 by investment banker Graham Tuckwell, is one of the largest operators of commodity ETFs, with $21 billion of assets. Its gold is in the custody of UBS and under the watchful eye of auditors who occasionally drill into the bars to prevent any funny business. The metal is in Zurich, far from the reach of any future U.S. decision to outlaw the private ownership of gold. Banks in London and Toronto are less safe, Rhind says, because their host governments can't be trusted not to go along with a confiscation order like the one that came upon U.S. savers in 1933. Yikes -- a conspiracy between the U.S., Canada, and England? It could happen. Anything could happen. Join GATA here: 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
|
| The Raid on Gold and Silver foiled...Sept 30.2010 Posted: 30 Sep 2010 02:12 PM PDT
|
| Caisse Getting Ready for the Next Big Move? Posted: 30 Sep 2010 01:58 PM PDT
Frederic Tomesco of Bloomberg reports, Caisse Pension Fund May Borrow More After C$8 Billion Program, Sabia Says:
Mr. Sabia is right, the Caisse being a mature fund needs to reduce refinancing risk and be as opportunistic as possible while minimizing risk, which is very difficult when you're managing billions. In another interview with Frederic Tomesco of Bloomberg, Mr. Sabia said the Caisse plans to increase investments in energy and minerals to benefit from an expected commodities boom:
I'm glad to see the Caisse is overweight commodities and energy. One of my favorite strategists, Martin Roberge of Dundee Capital Markets went overweight energy, citing "sector undervaluation conditions". I like energy too, especially renewable energy, and loaded up on Chinese solars long before they melted up. Some traders see solars as a leveraged play on oil prices. I simply love the sector's long-term fundamentals regardless of where oil is trading and strongly suggest that pensions take a very close look at the solar sector (some, like CalPERS, already have). And how did I first notice solars? A while back, I checked out the holdings of a few top hedge funds that I regularly track, looked at solars and started trading them. They are volatile, manipulated to death through naked short-selling, high-frequency trading, but I knew the big hedgies and investment banks were bringing them down to load up on them (that's when you average down and load up some more). I continue to believe that we are in the early stages of a major bubble in renewable energy. Stocks that have now doubled will triple, quadruple and quintuple faster than you can blink. And if they dip, I will just load up more. The name of the game remains reflate and inflate. There are plenty of opportunities in other sectors but I can't share all my secrets on my blog. All I can share here is that the game is rigged and the big hedgies are working in unison with major investment banks to rig it. If you know how to read wild swings in these markets, and stick to your guns (you need conviction and balls of steel to stomach wild gyrations), you can make a lot of money fast. But don't get too greedy because as my dad always tells me what goes up fast comes down faster. As for the Caisse, I like what I'm seeing. The focus now is not just on risk management but also on taking positions in public and private markets as opportunities arise. This is the way of the future and I hope all pension funds are taking notice. If you sit there, pondering you're next move, discussing it ad nausea in front of some investment committee, you're going to be left behind. This wolf market is treacherous and funds that don't adapt will wither away.
|
| Silver Shines as an Economic Solution Posted: 30 Sep 2010 01:47 PM PDT
|
| You are subscribed to email updates from Gold World News Flash To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment