Gold World News Flash

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• Quantitative easing: The numberless oblivion, ‘If you print a trillion, I’ll print a trillion,’ ...
• [Video & Text] Dollar at Risk of Becoming 'Toxic Waste': Charts
• Gold Reacts and Mining Sector Benefits
• Bonds, Gold and the Dollar: What They All Portend
• James Turk - Gold & Silver Will Breakout to the Upside
• John Embry - Gold & Silver Commercial Signal Failure
• Crude Oil Rises in Listless Trading Session, Gold Boosted by Sinking Dollar but Still
• Questionable Speculative Confidence Boosts both Oil and Gold
• Gold Seeker Closing Report: Gold and Silver Gain Over 1%
• Show us your TIPS!
• THE VENETIAN STATE
• Hugo Salinas Price: Silver money for Americans
• Don't Believe The Rally?
• GATA chairman's address at Silver Summit posted at YouTube
• GATA chairman's address at Silver Summit posted at YouTube
• Monetary Meltdown Monday
• Daily Dispatch: But This Time It’s Different
• How Realistic Is $5,000 Gold?
• Gold Performance to Continue to Lag That of Stock Market
• Investing in Silver: Is This Precious Metal Set to Beat Out Gold?
• With Gold Prices Like These, The Market is Handing You a Gift Labelled "Last Chance"
• Bill Black On Foreclosuregate: Calls For The Immediate Termination Of Bernanke, Geithner And Holder
• Michael Berry: Gold Reacts and Mining Sector Benefits
• No Gold Or Silver Bubble Says Sprott's John Embry
• Edwin Vieira: Gold must replace the corrupt U.S. monetary system
• CFTC should target runaway robotic trades, Commissioner Chilton says
• The G20 Was A Dud, So What Now?
• Tiny Tim’s Big Fantasy
• MONDAY Market Excerpts
• Where can we find 20,000 tonnes of gold?
• Gold and SP 500 December Futures Daily Charts
• More Nukes!
• California Dreamin’
• Grandich Client Spanish Mountain Gold
• Broke States Or Stock Selloff: The Capital Gains Tax Dilemma
• Treasury Draws Negative Yield for First Time During TIPS Sale
• Major Volume Supporting The U.S. Dollar As Gold And Silver Come Under Pressure
• The Eiffel Tower’s (Fiscal) Imbalance
• The Killer of Drillers
• Top CFTC Official Chilton Blasts Computer-Generated Algorithms Run Amok, Blames Flash Crashes On HFT Robots
• The one-year study - Gold uncorks big year
• Weekly Market Update Excerpt - Oct. 25, 2010
• Gold shines brightest in five and ten-year studies
• Gold still an integral part of the current monetary system
• Hourly Action In Gold From Trader Dan
• In The News Today
• USDA: Food inflation to accelerate into 2011
• Cariboo Rose TSX.V – CRB
• LGMR: Gold & Silver Rally Hard After G20 Fails to Name Cause of Dollar Weakness
• Jim's Mailbox

Quantitative easing: The numberless oblivion, ‘If you print a trillion, I’ll print a trillion,’ ... Posted: 25 Oct 2010 11:38 PM PDT If you listen to people like Geithner, the end of the world is quite near. Rich people everywhere are buying gold for a little peace of mind, not just the Chinese. They are literally trucking it by the ton or two home. When currency values vanish in a QE melee, at least the rich have the gold to stay rich.

[Video & Text] Dollar at Risk of Becoming 'Toxic Waste': Charts Posted: 25 Oct 2010 09:14 PM PDT The dollar's slump could get far worse if the dollar index takes out last year's low, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC Monday.

Gold Reacts and Mining Sector Benefits Posted: 25 Oct 2010 06:03 PM PDT In this exclusive interview with The Gold Report, investor, mathematician and former fund manager Michael Berry, PhD, tells us he is bullish on gold, which he expects will double or more in price in the not-too-distant future.

Bonds, Gold and the Dollar: What They All Portend Posted: 25 Oct 2010 06:02 PM PDT There are many difficulties associated with being lazy and inattentive like me, such as superficially interpreting the title "Gold Vs Treasuries – Which Do You Believe?" which is an essay by Michael Pento, Senior Economist of Euro Pacific Capital.

James Turk - Gold & Silver Will Breakout to the Upside Posted: 25 Oct 2010 05:52 PM PDT Turk commented, "Hat tip to Gene Arensberg, I think he has got it nailed with this technical flag pattern on silver that he brought up in the KWN Weekly Metals Wrap. What I think is going to happen is we will break out of this flag pattern to the upside, and it's going to stay strongly overbought for another 3, 4 or 5 weeks. ", "There is also a flag pattern in gold which means that both markets are in sync, and are ready to move higher. And keep in mind Eric, that we are still below 58 on the gold/silver ratio, meaning that silver is showing good relative strength. That is a bullish sign for both metals. My target is still 50 to 52 for the gold/silver ratio on this leg up of the bullish move.

John Embry - Gold & Silver Commercial Signal Failure Posted: 25 Oct 2010 05:46 PM PDT Investors should continue to use weakness in gold and silver to accumulate both metals. Buy gold & silver and take delivery of the physical, do not use paper instruments. These monetary instruments will have you outside of the system, which will in all likelihood collapse at some point.

Crude Oil Rises in Listless Trading Session, Gold Boosted by Sinking Dollar but Still Posted: 25 Oct 2010 04:22 PM PDT courtesy of DailyFX.com October 25, 2010 10:51 PM Though crude oil and gold both registered gains to kick off the new week, there was little conviction in the moves. The former seems to be consolidating, while the latter seems to have already put in a near-term top a couple weeks ago. Commodities – Energy Crude Oil Rises in Listless Trading Session Crude Oil (WTI) - $82.12 // $0.40 // 0.48% Commentary: Crude oil ended with a gain on Monday after a seesaw session. The commodity added $0.83, or 1.02%, to settle at $82.52. There was little conviction behind the advance; instead, prices are consolidating between $80 and $83, digesting the big run from earlier this month. U.S. equity markets offered little guidance, rising a mere 0.21%, though they were up more than that for much of the day. The economic calendar was light, though it did feature the sometimes-important U.S. existing home sales figures, which showed that September sales increased to 4.53 million u...

Questionable Speculative Confidence Boosts both Oil and Gold Posted: 25 Oct 2010 04:22 PM PDT courtesy of DailyFX.com October 25, 2010 04:16 PM Risk appetite was on the advance through the first half of Monday’s trading session; and both oil and gold would benefit from the move. The growth-linked crude move is intuitive; but the metal’s follow up tells us something is fishy. North American Commodity Update Commodities - Energy Flimsy Confidence in G20 Vows and US Housing Data Leads Crude to a Choppy Climb Crude Oil (LS Nymex) - $1,339.85 // $11.40 // 0.86% If equities are climbing, there is a good chance that oil is doing the same. That was the case Monday as investor appetite found a general boost through an increased sense of risk appetite across the capital markets. However, there were certainly constraints on this positive outlook. For example, aside from Monday’s positive close representing the first back-to-back climb for the commodity in nearly three weeks, the performance would suffer a sharp retracement when US liqu...

Gold Seeker Closing Report: Gold and Silver Gain Over 1% Posted: 25 Oct 2010 04:00 PM PDT Gold climbed as much as $24.43 to as high as $1348.93 in Asia before it fell back off in New York to as low as $1333.30 by late morning, but it then rallied back higher in the last couple of hours of trade and ended with a gain of 1.07%. Silver climbed to as high as $23.83 by about 8AM EST before it also fell back off in New York, but it still ended with a gain of 1.77%.

Show us your TIPS! Posted: 25 Oct 2010 03:42 PM PDT And now it has come to this.  With the Fed set to print more dollars than there is available rag paper (though they will soon be able to use the tattered clothing of the homeless and long-term unemployed to make up for that shortage), the US Treasury issued TIPS at a negative yield for the first time in history.  Wow.   Just think about that, Investors are willing to earn a yield on their fucking INFLATION PROTECTED securities that is below indexed fucking INFLATION because either they believe in the delightful French interpretation of inflation which means they are happy to avoid protection to get it, or they realize that QE2 (and its successors QE3, QE4, and QE holy shit we've run out of paper) is coming and thus they are willing to give up some of that inflation protection to get any protection at all and not figuratively be left standing completely exposed and merkin-less.   Buying a negative yield TIPS to protect your portfolio for the coming hyperinflation (and of course, hyper inflation is coming because of the aforementioned QE2 and not because it googled Alaina Huffington) is like buying a can of mace filled with visine to protect yourself from muggers.  It may stun a bit, but in the end, what was in your wallet is going to be gone.  So do as the Fed wants and hurry up and get your money in to the market because shortly the dollar isn't going to be worth anything, but just be sure to pull your money out before people realize the dollar isn't going to be worth anything because that won't end well either in the least fun absurdity since the Simpson Paradox (and Money McBags is not talking about this, but about the fact that the gloves didn't fit, and yet they still shouldn't have acquit).   Speaking of currency issues, the G20 met this weekend in an out of the way, yet highly rewarding spot that could only be reached with the help of a little man in a boat.  At the meeting, the G20 decided to try their best to avoid a “competitive devaluation” of currencies, to avoid letting trade balances get too out of whack, and most importantly, to avoid fat chicks.  The problem is that what the G20 actually committed too is looser than a diarrhetic's stool after chugging a six pack of metamucil as members refused to be tied down to any precise metric to avoid further currency issues.  As the WSJ pointed out, the strategy to avoid currency wars simply relies on peer pressure.  So to put that in perspective, avoiding a global currency clusterfuck now comes down to reminding China that they look fat in those jeans and telling Japan that all of the other cool kids are doing it.  Seems like a plan to Money McBags.   Aside from currency issues, the only macro news today was relatively positive as sales of existing homes rose by 10% which is the biggest rise on record (no word as to whether it was also the biggest rise on tape cassette or 8-track).  The number destroyed analyst guesses thanks to a 2.4% decline in prices, record low mortgage rates, and 35 fucking percent of all sales being distressed or foreclosed upon houses.  Not including shadow inventory and shadowier data, there remains ~11 months of inventory on the market so even though the relative jump in existing home sales prices seems jizztastic, we can't forget that the absolute sales were still more fuckawful than John Meriwether's track record or non-rhyming poetry, as they were the 3rd worst in history.  So while the relative is nice, we need to keep abreast of the forest through the trees (or the adam's apple through the make-up, if you will) and not lose sight of the absolute.   Finally, Ben Bernanke was out today saying regulators are looking in to the foreclosure mess as they once again prove the government is a backward looking entity.  Benny B promised to have a report out by November which will detail the policy, practices, and internal (non) controls that led to robosigners and likely robotrippers ignoring mortgage paperwork in order to get more properties in to MBS CDOs to juice up yields so every random fucking douchebag at Goldman could drive cars that run on white truffle oil and unicorn tears.  Money McBags would say he eagerly awaits the report, but as he already knows it was all Waddell and Reed's fault, he looks at the upcoming review as just another exercise in post-crisis mental masturbation (better known as the worst 12 hours of John Bobbit's life).   In the market, BAC took some losses as they admitted that there were mistakes in their foreclosure files including improper paperwork, missing signatures, and a severe lack of proper TPS reports.  Radio shack dropped ~7% due to weaker sales of accessories, though more surprising to investors was that Radio Shack was still even in business given that there is a little something called the internet where people can order the same shit they sell at Radio Shack for cheaper and without having to put on pants.  Finally, Office Depot rose ~7% as the CEO announced he is stepping down after settling "improper disclosure" charges with the SEC.  Those "improper disclosures" were said to include the CEO claiming Office Depot is a viable company and releasing photocopies of his hanging accessories.   Money McBags gets busy with even more, including small stock analysis, at the award winning When Genius Prevailed.

THE VENETIAN STATE Posted: 25 Oct 2010 03:10 PM PDT 3/12 THE VENETIAN STATE The tremendous stability of the Venetian state has fascinated historians. How is it possible to maintain the great power of Venice for more than a millennium and a half without being conquered from the outside, and without significant upheavals from within? Venice remained impervious to foreign invasion from the first settlement until 1797. The monolithic iniquity of Venetian state institutions was seriously disturbed no more than a half dozen times from within the city, and such incidents were speedily terminated by bloodbaths that restored stability rather than spurring more violence. This feature of the Venetian oligarchical system contrasts sharply with that of its rival, Genoa, where each regime from 1300 to 1500 had the life expectancy of an Italian government today. It contrasts sharply with the papacy, where the highest office was up for grabs every dozen years or less, and where humanist factions could sometimes prevail. In Venice, the bloody resolution of internal faction fights within the oligarchy was suppressed to a minimum, and these energies were effectively sublimated in the depredation of the outside world. The raging heteronomy of each oligarch was directed outward, not at his factional rivals. In the typology of Plato’s Republic, Venice is an oligarchy, “a constitution according to property, in which the rich govern and the poor man has no share in government,” “the rule of the few, constitution full of many evils.” This oligarchy has a residue of timocracy, of rule based on honor. But at the same time the Venetian regime was perversely aware of Plato’s description of the swift transition from oligarchy to democracy and thence to tyranny, and against this evolution the patriciate took measures. Plato notes in Book VIII of The Republic that a “change in a constitution always begins from the governing class when there is a faction within; but so long as they are of one mind, even if they be a very small class, it is impossible to disturb them.” The threat of factionalization is located in the “storehouse full of gold, which every man has,” and which “destroys such a constitution.” The oligarchs “lay a sum of money, greater or less, according as the oligarchy is more or less complete, and proclaim that no one may share in the government unless his property comes up to the assessment. This they carry out by force of arms, or they have used terror before this to establish such a constitution.” Venice lasted as long as it did because of the effective subordination of the oligarchs and families to the needs of the oligarchy as a whole, by the ironclad delimitation of noble status to those already noble in 1297 and their male descendants, and by continuous terror against the masses and against the nobility itself. All male members of the approximately one hundred fifty noble families had the permanent right to a seat in the Gran Consiglio, or Great Council, which grew to 2000 members around 1500 and thereafter slowly declined. The seat in the Gran Consiglio and the vote it brought were thus independent of which faction happened to be calling the shots at a given moment. The ins might be in, but the outs were sure of their place in the Gran Consiglio, and this body elected the key governing bodies of the regime. The first of these were the one hundred twenty members, or Pregadi, of the Senate, the upper house which oversaw foreign affairs by choosing the Venetian ambassadors. In the middle of the fifteenth century, Venice was the first and only power which regularly maintained permanent legations in all principal courts and capitals. The Senate also chose five war ministers, five naval ministers (all called Savi), and six Savii Grandi, ministers of still higher rank. The Gran Consiglio elected a Council of Forty, which was first devoted to budget and finance matters, later more to criminal prosecution. The Gran Consiglio chose three state prosecutors, who could and did sue any official of the state for malfeasance, although the doge was accorded the privilege of being tried after his death, with his family paying any fines levied. The Gran Consiglio also elected the doge himself, through an incredible Byzantine procedure designed to assure a representative choice. First, thirty members of the Gran Consiglio were chosen at random, using colored balls whose Venetian name is the origin of the American word ballot. These thirty drew lots to cut their number down to nine, who then nominated and elected a new group of forty electors. These were then cut down by drawing lots to a group of twelve. This procedure was repeated several times, terminating with a group of forty-one electors of whom twenty-five could nominate a doge for the approval of the Gran Consiglio. Somewhat less complicated procedures were used to select a group of six advisors for the doge. Most typical of the Venetian system is the Council of Ten, established in 1310 as the coordinating body for foreign and domestic political intelligence operations. Meeting in secret session together with the doge and his six advisors, the Ten had the power to issue a bill of capital attainder against any person inside Venetian jurisdiction, or abroad. If in Venice, that person was generally strangled the same night and the body thrown into the Canale degli Orfani. The Ten had at their disposal a very extensive foreign intelligence network, but it was inside Venetian territory that their surveillance powers became pervasive: the contents of any discussion among oligarchs or citizens was routinely known to the Ten within twenty- four hours or less, thanks to the ubiquity of its informers and spies. Visitors to the Doge’s Palace today can see mail slots around the outside of the building in the shape of lion’s mouths marked Per Denontie Segrete (”For Secret Denunciations”) for those who wished to call to the attention of the Ten and their monstrous bureaucracy individuals stealing from the state or otherwise violating the law. Death sentences from the Ten were without appeal, and their proceedings were never made public. Offenders simply disappeared from view. The Venetian regime is a perverse example of the “checks and balances” theory of statecraft, and there were indeed a myriad of such feedback mechanisms. The Savii Grandi balanced the powers of the doge, who was also checked by his six advisors, while more and more power passed to the state inquisitors and the chiefs of the Ten. The state attorneys acted as watchdogs on most matters, as did the Senate, and in times of crises the Gran Consiglio would also assert its powers. The Ten were constantly lurking in the background. Almost all officials except the doge were elected for terms averaging between six months and one year, with stringent provision against being reelected to an office until a number of months had passed equal to the oligarch’s previous tenure in that post. This meant that leading oligarchs were constantly being rotated and shunted from one stop on the Cursus Honorum to another: to Savio Grande to ducal advisor to state inquisitor and so forth. There was no continuity of the population of Venice; the continuity was located only in the oligarchy. In fact, the population of the city seemed unable to reproduce itself. Venice suffered astronomical rates of mortality from malaria and the plague – its canals, it must be remembered, were first and foremost its sewer system. The decimated natives were continually replenished by waves of immigration, so much so that the Frenchman Philippe de Comynes, an adversary of Machiavelli, could report that the population was mostly foreigners. Internal order was entrusted to an intricate system of local control in each of the city’s sixty parishes, meshing with an elaborate apparatus of corporatist guilds called the Scuole. This was supplemented by an unending parade of festivals, spectacles, and carnivals. Very few troops were usually stationed in the city. So much for the phenomena. Reality was located in the fact that an elite of ten to fifteen families out of the one hundred fifty effectively ruled with an iron hand. Various Venetian diarists let the cat out of the bag in their descriptions of corruption and vote-buying, especially the bribery of the impoverished decadent nobility, called Barnabotti, who were increasingly numerous in the Gran Consiglio. The regime ran everything, and offices of all types were routinely sold. This reality of graft was also known to Dante. The poetical geometry of Canto 21 of the Inferno, the canto of the grafters or Barattieri, is established by a reference to the Venetian Arsenal and the pitch used to caulk the hulls of the galleys: As in the Arsenal of the Venetians Boils in the winter the tenacious pitch To smear their leaky vessels over again, For sail they cannot. The souls of the grafters are immersed in the boiling pitch, where they are guarded by the Malebranche, grotesque winged monsters armed with spears and hooks: a fitting allegory for the souls of the Venetians. Dante visited Venice in 1321, acting in his capacity as diplomatic representative of the nearby city of Ravenna, whose overlord was for a time his protector. He died shortly after leaving Venice. The two explanations of his death converge on murder: one version state that he was denied a boat in which to travel south across the lagoon. He was forced to follow a path through the swamps, caught malaria, and died. Another version says that a boat was available, but that to board it would have meant certain assassination. Venetian records regarding this matter have conveniently disappeared.

Hugo Salinas Price: Silver money for Americans Posted: 25 Oct 2010 02:03 PM PDT 9p ET Monday, October 25, 2010 Dear Friend of GATA and Gold (and Silver): Hugo Salinas Price, president of the Mexican Civic Association for Silver, today proposed for the United States the mechanism he long has been advocating in Mexico for the gradual remonetization of silver as the first step toward the restoration of a system of sound money. His essay is titled "Silver Money for Americans" and you can find it at the association's Internet site, Plata.com, here: http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=1... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Resource Goes Into Production at Ulaan Ovoo Coal Mine in Mongolia A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there. For the company's complete announcement, please visit: http://www.prophecyresource.com/news_2010_oct14.php Join GATA here: New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Don't Believe The Rally? Posted: 25 Oct 2010 01:58 PM PDT Via Pension Pulse. I wanted to follow-up on my previous post where Leo de Bever articulated his fears on what will happen when the music stops. Joe Saluzzi, co-founder of Themis Trading, was interviewed on Yahoo Tech Ticker on Monday (see video below): Major averages are hovering near their highest levels since September 2008, but retail investors continue to flee the market.   Domestic equity funds have suffered outflows for 24 consecutive weeks through Friday, and over $81 billion has come out of domestic equity mutual funds year to date, according to Morningstar.   At the risk of stating the obvious, several factors explain why investors simply don't trust the rally.   Twice bitten, thrice shy: Having been burned by the bursting of the tech stock bubble in 2000, the housing bubble and the financial crisis of 2008, investors are understandably wary of getting sucked in again. A "lost decade" for index investors hasn't helped either.   It's the Economy Stupid: With the "real" unemployment rate near 17%, millions of Americans simply have no money to put into the market; many are cashing out their 401(k) plans and otherwise raiding their nest eggs in an effort to stay afloat. Given the economic backdrop, it's no surprise many investors see the rally as being detached from reality and due only to the Fed's easy money policies...and the promise of more!   "We're not seeing any sort of growth other than stimulus," says Joseph Saluzzi, co-founder of Themis Trading. "That is a very disturbing thing -- the constant stimulus that keeps on coming that really does nothing other than barely keep you above [breakeven] on the GDP print."   In addition, Saluzzi says investors are rightfully worried about a market dominated by "high-speed guys just chasing each other up and down the price ladder."   Unsafe at High Speeds   As has been widely reported, high-frequency trading routinely accounts for more than 50% of daily U.S. equity trading volume and regularly approaches 70%. Saluzzi isn't opposed to high-frequency trading per se, calling it a "byproduct of the market structure," as detailed in the accompanying video. But he believes that structure is broken, thanks to rules promoting computer-driven trading, most notably Reg NMS.   As a result of regulatory changes and new technology, events like the May 6 ‘flash crash' "will happen again," he says. "There's not a doubt in my mind."   Many retail investors feel the same way, another reason for the mistrust of the rally and why about $65 billion of the equity fund outflows this year have occurred in the five months since the "flash crash". So are high frequency trading (HFT) platforms accounting for 70% of the daily trading volume? I'm not sure if it's that high but I have no doubt that today's stock market is primarily driven by multi-million dollar computers developed by large hedge funds and big banks' prop desks. But what's the best way to beat high frequency trading? Take a long-run view on a stock, a sector, or an asset class. You're never going to beat the computers day trading but you can make money in these markets by understanding the weakness of these HFT platforms. For example, if you hold shares of a solid company and the price plunges on high volume for no real valid reason, chances are some HFT is going on in that company. My advice is to add to your positions on those dips and just hold on. If you get cute, placing tight stop losses, you're going get burned. Just like anything else, computers have advantages and disadvantages. [Note: Keep an eye on Citigroup (C), a favorite target of HFTs, and Research in Motion (RIMM). Both stocks are primed to break out from these levels. I prefer RIMM.] What worries me more is what Saluzzi says on how volatility is impacting the IPO market. But the facts don't back up his claims. In fact, according to Renaissance Capital, $23 billion was raised in the global IPO market last week, making it the biggest week this year and signaling a revival in investor interest for this class of equities:   The Hong Kong offering of AIA, a carveout of AIG's Asia Pacific life-insurance business, raised $17.8 billion, making it the fifth-largest IPO on record. Also Taiwan's TPK Holdings has a $200 million IPO; the firm is the supplier of the touch-screen technology behind Apple's iPad.   In early November, Coal India IPO is set to raise more than $3 billion in what may be the country's largest-ever initial public offering.   In the U.S., handbag-maker Vera Bradley (VRA), Chinese education provider TAL Education (XRS) and Italian restaurant chain Bravo Brio (BBRG) raised a combined $440 million, while in South America, oil and gas provider HRT Participações sold $1.4 billion in new stock on Thursday.   Norway’s Statoil Fuel & Retail raised $800 million after pricing at the top of the range Thursday. Andthe world's largest online betting exchange, London-based Betfair, made its public debut by raising $540 million.   The average 2010 IPO has returned 6.3% from its first day close to date, outpacing the 4.8% year-to-date return of the MSCI World Index (IWRD), says Renaissance.   “Heavy, deal flow, positive returns and a swelling IPO pipeline suggest an active close to an already active year, and an IPO market that has finally returned to more normalized issuance levels,” the company said in an online blog. As for the economy, don't just focus on the US. CPB Netherlands Bureau for Economic Policy Analysis released its world trade report on Monday, showing world trade up 1.5% month-on-month in August and world industrial production up 0.2%: Compared to its long run average, production momentum remains high in July, particularly in the United States, the Euro Area, and emerging Asia. There is a lot of slack in the US economy, but things are slowly shifting. As for the rally, there is plenty of liquidity to propel shares much higher. While I understand asset managers who are skeptical, I fear they will be left in the dust when the markets start going parabolic. And whether or not you believe in the rally, it's irrelevant. What is relevant is how long can you afford to underperform the markets before you lose your job?

GATA chairman's address at Silver Summit posted at YouTube Posted: 25 Oct 2010 01:41 PM PDT 8:35p CT Monday, October 25, 2010 Dear Friend of GATA and Gold (and Silver): GATA Chairman Bill Murphy's address last week to the Silver Summit in Spokane, Washington, was videotaped by BearMarketCentral.com's editor and Publisher, Larry Hoffenberg, and has been posted in three parts at YouTube here: http://www.youtube.com/watch?v=gRsbdRvEou4 http://www.youtube.com/watch?v=SuKMrpz8-nI&feature=related http://www.youtube.com/watch?v=rmHRZXMiens&feature=related During his remarks Murphy announces that GATA will be featured this Friday night (10p ET) on the TruTV network program, "Conspiracy Theory with Jesse Ventura": http://www.trutv.com/shows/conspiracy_theory/index.html CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Resource Goes Into Production at Ulaan Ovoo Coal Mine in Mongolia A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there. For the company's complete announcement, please visit: http://www.prophecyresource.com/news_2010_oct14.php Join GATA here: New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

GATA chairman's address at Silver Summit posted at YouTube Posted: 25 Oct 2010 01:41 PM PDT 8:35p CT Monday, October 25, 2010 Dear Friend of GATA and Gold (and Silver): GATA Chairman Bill Murphy's address last week to the Silver Summit in Spokane, Washington, was videotaped by BearMarketCentral.com's editor and Publisher, Larry Hoffenberg, and has been posted in three parts at YouTube here: http://www.youtube.com/watch?v=gRsbdRvEou4 http://www.youtube.com/watch?v=SuKMrpz8-nI&feature=related http://www.youtube.com/watch?v=rmHRZXMiens&feature=related During his remarks Murphy announces that GATA will be featured this Friday night (10p ET) on the TruTV network program, "Conspiracy Theory with Jesse Ventura": http://www.trutv.com/shows/conspiracy_theory/index.html CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Resource Goes Into Production at Ulaan Ovoo Coal Mine in Mongolia A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there. For the company's complete announcement, please visit: http://www.prophecyresource.com/news_2010_oct14.php Join GATA here: New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Monetary Meltdown Monday Posted: 25 Oct 2010 01:17 PM PDT Monetary Meltdown Monday By Phil at Phil's Stock World  Last Friday, Geithner’s message was "Do as I say, not as I do." This weekend, Timmy took a big doo doo on the rest of the World as he pressed fellow Finance Ministers into (in theory) setting mechanisms to address trade balances (which means export countries need to strengthen their currencies against the dollar) while importing countries (like US) should not try to manipulate their own currency.  Well, that sounds reasonable EXCEPT, before the ink is even dry on the G20 release, Timmy flies off to China to get them to commit to revalue the Yuan, which is pegged to the Dollar and effectively DE-values the dollar in an entirely manipulative manner.   No, WE didn’t manipulate the Dollar, China did.  We only told them to manipulate their currency which is tied to the dollar, so it’s not the same thing at all as us manipulating the dollar and —- oh my God Tim, how can you sleep at night??? So good morning, America, how are ya?  I’ll tell you how you are, you are 1% poorer than you were on Friday as the Yen rises to 80 to the Dollar and the Euro rises to $1.41 and the Pound hits $1.58. That drive oil back over $82.50 and gold back to $1,350 and copper hit $3.89, up from $3.75 on Friday - that’s 3.5% inflation of a basic material OVER THE WEEKEND!  That annualizes out to about 1,000% but let’s be fair and say this only happens on weekends and call it 52 x 3.5% for 182% - hyperinflation accomplished!  Of course, we don’t need 182% increases in commodities to achieve hyperinflation, hyperinflation is anything over 26% and our Dollar is down 15% since May and that’s 5 months so we’re heading for 36% over 12 months already.   I’ve been invited to attend the Economists’ Buttonwood Gathering in New York today where the agenda will be discussing the State’s Fiscal Crises led by Robert Rubin and Josh Bolten over lunch followed by BOE Governor Mervyn King’s speech on "International Reform in the Financial Sector" and then my favorite bond pimp, Mohamed El-Erian will be speaking about "Sovereign Risk and the Banks" followed after market hours by Vikram Pandit (Citigroup’s CEO) and then Nassim Taleb (Black Swan) after which there’d better be drinks!   I usually can’t be bothered with these things but this conference is likely to move the markets and I should, in theory, be able to chat with our Members live from the conference, so this should be fun. Tomorrow (Tuesday) is currency day with the after-lunch meeting titled "Global Currency: Crisis of Confidence" with Joyce Chang (JPM) and Paul Volcker giving their views and the 3:30 lecture is titled "China: The Decade of the Dragon?" with the exiled Stephen Roach, Jim Chanos, Gene Ma and Xu Sitao, who is the Economist’s China Director.  So, lots of interesting stuff from interesting people and, while the gold bugs and the dollar doomsayers should be able to pull plenty of good quotes, I will be looking to get the mood of the attendees, who are themselves a veritable who’s who of the investing World.  (For laughs, read Joshua Brown's permabear post.) With this global gathering of market movers, I guess we’d better get a global perspective on the markets, right?  Let’s take a look at our global multi-chart and see how we are doing.  The blue lines are our mid-points and the greens are the 10% lines and they reveal an interesting pattern:  It’s a tale of two economies with our net exporters following the path of copper (mirroring the collapsing Dollar) and up around those 20% lines.  As we can see from the Baltic Dry Index, which is DOWN 10% - there is not any more demand for goods, they are simply more expensive when priced in a weak currency.  Germany’s currency is artificially held down by the weight of the rest of the EU while the UK gets less of a boost despite their oil and mining economy because the pound is not artificially tied down to the weaker EU nations.  France is the World’s 5th largest economy and on par with US performance as that country enjoys week two of national strikes.   As we discussed last week, the weak Dollar allows our markets to "ignore and soar" as 15% pullbacks in our currency are reported as 15% earnings beats to US investors while the MSM does nothing to educate it’s readers as to VALUE.  In Friday’s Member chat, we compared the Dow, S&P and Nasdaq priced in Dollars, Euros and Yen to get a better picture of where our markets are now: Priced in real currencies, our markets are DOWN 10-20% since May.  That’s not entirely a bad thing - it means we look like a bargain to global investors, providing they are as clueless as to exchange rates as their American counterparts.  Unfortunately, I don’t think foreigners are that stupid, which is one of the reasons I look forward to going to the conference today as I can actually quiz some of these famous foreign investors to see if they can pass the old Jay Leno test... That is just sad, isn’t it?  But not as sad as the MSM in this country cheerleading stocks and the market as if they are "en fuego" when they are, in fact, LOSING ground to the declining dollar. October alone has seen a 5% drop in the dollar and only the Russell has managed a 5% gain.  This is interesting because small-cap, relatively local companies benefit the least from the declining dollar but we haven’t gotten a lot of Russell earnings yet as the S&P had the floor last week so it will be interesting to see what holds up as the smaller companies begin reporting their earnings.      As I said to Members last week: "It looks like we COULD break out and up if the sentiment turns enough in favor of the US markets and we certainly look like a cheap laggard compared to EU or Asian investors local markets and that does mean a 10% upside is possble but, from ourt perspective - only if the Dollar stay here or goes down AND foreign investors start to buy American. Not at all coincidentally - that’s exactly what Timmy’s asking for in South Korea this morning!" Not counting our 10 new Dividend Plays, which are all bullish of course, we did manage to get a little more bearish than the prior week’s 21:10 bull/bear ratio of trade ideas.  Last week we cut it down to 16 bullish to 10 bearish trade ideas although, once again, the bear plays were mainly of the hit and run variety as we are still fundamentally bearish but technically bullish - which means we have to take a lot of trades we don’t really believe in to play the game (although I favor not playing (cash!) into the election, but we service a large Membership and it is kind of dull not to trade at all, isn’t it?).   Generally, we just want to make sure we make 2.5% a month to keep up with inflation but, other than that, the markets are a very scary place to be and, with Halloween approaching, you never know what horrors you are going to find when you pull that mask off.   We have a Datapalooza this week with Existing Home Sales at 10 today followed by the old Case-Shiller not adjusted for the declining dollar Home Price Index at 9 and Consumer Confidence (or lack thereof) at 10 along with the FHFA also not reflecting the declining dollar Home Price Index. Why is it that it’s easy for us to understand that if the $1M Zimbabwe Dollars becomes $1Bn Zimbabwe Dollars a year later, that a man selling his home for $10M is a fool but we don’t understand how 1 US Dollar, that is now $1.35 US Dollars to buy the same oil, gold, copper, silver, diamonds, corn, wheat, soybeans etc that it did last year means your "stable" home price is actually an additional 35% drop?  Is it really that hard to see?   The same goes for the people selling cars and clothing and even beloved IPods - if you are collecting the same amount of money but getting paid in what is effectively Monopoly money - are you really doing well?  Now, where was I?  Oh yes, data!   Wednesday we get to see if anyone applied for a Mortgage last week and at 8:30 we get Durable Goods Orders, which should be up as we sold the Saudis a bunch of WMDs in the form of fighter jets.  At 10am we get New Home Sales and, of course, Oil Inventories at 10:30.  Thursday another 450,000 pink slips will be handed to US workers but, more importantly, on Friday we get the Q3 GDP where bad news will be good news for those who pray for QE2.  We also get the Chicago PMI and Michigan Sentiment on Friday and, of course, then we head into the election so fun, Fun, FUN!   It’s going to be an exciting week and it’s starting off with a bang as the Dollar tests new lows at the open.  I think this is an excellent opportunity to cash in long positions and sit on that worthless cash through the election or at least to get very, VERY well-hedged.   Seven banks were shut down on Friday, lifting the year’s total to 139 banks that were in such bad shape that FDIC examiners had to storm in and confiscate everything over a weekend.   The Hillcrest Bank of Overland Park, Kan, had $1.6Bn in assets and we are just 1 more bank away from topping last year’s mark of 140 bank closures, the most failures since the year after the first Bush left office in 1992 (just a coincidence, I’m sure).    Perhaps BAC will make the list one day as the are being hit with a Class Action Suit on behalf of homeowners seeking damages for alleged disregard of foreclosure process rules.  The suit, filed Wednesday in federal court in Newark, N.J., accuses Bank of America and two subsidiaries, LaSalle Bank and BAC Home Loans Servicing, of “an undisciplined rush to seize homes” through “pervasive and willful disregard of knowledge, facts and statutes.”  The putative class in the suit, Beals v. Bank of America, N.A., 10-cv-05427, consists of all named defendants in pending New Jersey foreclosure actions initiated by Bank of America or its affiliates. The complaint includes counts of common-law fraud, breach of the covenant of good faith and fair dealing and violations of the New Jersey Fair Foreclosure Act and Consumer Fraud Act. It continues to be all about the Dollar this week and we shall see how low it can go.  I’ll be talking to the luminaries all day at the conference and I’ll keep you informed as to the mood, as well as the official spin from El Erian and company.   Be careful out there!   - Phil

Daily Dispatch: But This Time It’s Different Posted: 25 Oct 2010 12:52 PM PDT October 25, 2010 | www.CaseyResearch.com But This Time It’s Different (Vedran Vuk filling in for David Galland) Dear Reader, The best-laid plans have not come to fruition. Chris Wood is back, but feeling a bit under the weather today. So I’ll be taking the reins of the CDD again. First up, we have an article from Kevin Brekke on the Singapore Exchange’s takeover of the Australian Bourse. This promises to be another important step in consolidating the world’s stock exchanges. Over the next decade, we’ll see more similar mergers. In my opinion, the world is severely behind on integrating stock exchanges. But as the U.S. dollar continues to lose its status as the reserve currency of the world, this process should begin to accelerate even faster. When New York City was the world’s primary investment center, it was silly to put your money anywhere else. But as the limelight dims on ou...

How Realistic Is $5,000 Gold? Posted: 25 Oct 2010 12:51 PM PDT Taking into account 11 key measurements based on historical movements and price ratios, gold is likely to exceed $5,000 and silver is likely to exceed $200 within the next 5 years. If silver reverts to its historical ratio of 16 to 1 with gold, then it could rise even higher. Let me explain. So says Chris Mack (tradeplacer.com) in a recent article* which Lorimer Wilson, editor of MunKnee.com, has reformatted into edited [...] excerpts below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Mack goes on to say: In recent weeks gold and silver have broken through their multi-month consolidation levels, and investors are wondering where the precious metals are headed. On a short term basis both gold and silver are overbought and due for a correction that may retest the breakout levels of $1,250 on gold and $20 on silver. $1,500 Gold and $30 Si...

Gold Performance to Continue to Lag That of Stock Market Posted: 25 Oct 2010 12:19 PM PDT [B]Gold and the Stock Market[/B] Gold and silver have had a sharp move downward in response to China’s first interest rate hike last week while the stock market inched up. It raises the question of whether gold is decoupling from the stock market. So says Nu Yu, Ph.D. (fx5186.wordpress.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Yu goes on to say: Has Correlation Between Gold and the Stock Market Changed? By using a correlation indicator calibrated for the intermediate-term, the following weekly chart shows the change of coupling between gold and the S&P 500 index during the past six years. The value of the correlation indicator lies between 1 and -1. a) If the correlation value is 1 it indicates a perfect positive coupling between ...

Investing in Silver: Is This Precious Metal Set to Beat Out Gold? Posted: 25 Oct 2010 11:13 AM PDT Investment U submits: By Tony D'Altorio Silver has served as a measure of value and currency for over 4,000 years. As early as around 600 B.C., citizens of Lydia used it for coins. But while hardly new, it’s still giving investors something to talk about these days. Complete Story »

With Gold Prices Like These, The Market is Handing You a Gift Labelled "Last Chance" Posted: 25 Oct 2010 11:04 AM PDT Gold Price Close Today : 1338.30 Change : 13.90 or 1.0% Silver Price Close Today : 23.544 Change : 0.419 cents or 1.8% Gold Silver Ratio Today : 56.84 Change : -0.429 or... This is a summary only. Visit GOLDPRICE.ORG for the full article, gold price charts in ounces grams and kilos in 23 national currencies, and more!

Bill Black On Foreclosuregate: Calls For The Immediate Termination Of Bernanke, Geithner And Holder Posted: 25 Oct 2010 11:00 AM PDT Bill Black, who will soon, together with Neil Barofsky, be a guaranteed shoe-in for the POTUS/VP position (both as independents, of course), was on the Ratigan show today, following on his op-ed from last week (here and here) calling  for the long-overdue nationalization of Bank of America, and discussing the rampant fraud at the heart of mortgage gate. And contrary to ongoing lowball estimates from the like of JPM and Goldman, Black provides numbers about the bank liability that are simply stunning: "Credit Suisse says that by 2006 49% of all mortgage originations were liars loans. When independent folks study fraud, it is in the 80-90% fraud range. That means there were millions of acts of fraud. Those loan frauds occurred because the banks created incentive structure for the loan brokers to bring them the absolute worst of the worst loans, and to lie on the application forms... These frauds came from the banks, and they propagated through the system through a series of echo epidemics...This fraud spread through the system and that's why we have a crisis in foreclosures. This stems from the underlying fraud by the lenders in mortgage loans to the tune of well over a million cases a year by 2005." Furthermore, Black points out the glaringly obvious, that the Fed should not be in charge of any investigation into mortgage fraud, due to its "massive" conflict of interest, to the tune of $1.5 trillion in MBS/agencies held on the Fed's books, which would be immediately null and voided if rampant MBS fraud is indeed uncovered. Which is precisely why the entitlement of the Fed as supreme regulator (as inspired by the financial generosity of the Wall Street lobby) as part of Frank-Dodd was the one single most destructive decision ever made, and equivalent in many ways with electing America's very own tyrannical despot, whose only interest is making the multi billionaires, into trillionaires, and leaving everyone else in the cold through the eliminating of the savings class and the destruction of the reserve currency. And it goes much further... to the very top of the US ruling oligarchy in fact. Which is why, as we have claimed from day one, nothing less than a complete reset of the entire kleptocratic system can give any hope for a fresh start. The general public is starting to finally realize this, unfortunately with the dawning realization comes anger, and with anger comes aggression. And from there, broad civil "discontent" is merely a thin white line away. Which is why, we again reiterate our belief, now that America has completely missed its chance for a peaceful resolution, that the reset will have to go first and foremost through the Fed, whose end however will be precipitated by nothing less than an all out social upheaval. We agree with Black's conclusion: "fire Holder, fire Geithner, fire Bernanke, get people in who will enforce the rule of law." Alas, it is too late. America has proven it has failed as a society in which checks and balances work when Wall Street dangles billion dollar bribes to corrupt and greedy individuals. And just like the market is stretched so far that it is always seconds away from a flash crash, so the entire US society is now mimicking our stock market, and the possibility for an all out social flash crash is no longer trivial.

Michael Berry: Gold Reacts and Mining Sector Benefits Posted: 25 Oct 2010 10:22 AM PDT Source: George S. Mack and Karen Roche of The Gold Report 10/25/2010 In this exclusive interview with The Gold Report, investor, mathematician and former fund manager Michael Berry, PhD, tells us he is bullish on gold, which he expects will double or more in price in the not-too-distant future. In the meantime, with organizational skills developed in a previous career as professor of investments, Berry has created a 10-point "Discovery Investing" (DI) model by which all stocks in his universe are graded. For his own portfolio and as well as his Morning Notes newsletter, he has staked out plays on several small- and micro-cap mining stocks that he expects will perform quite well through either price appreciation on discoveries or takeover. The Gold Report: As part of a short-term plan to sell $66 billion in debt, the U.S. Treasury recently auctioned $32 billion of three-year Treasury Notes at an all-time record low rate of 0.57%. Why is this negative for the economy?...

No Gold Or Silver Bubble Says Sprott's John Embry Posted: 25 Oct 2010 10:03 AM PDT On one hand, one has professional stock bubble top-tickers (of the variety that would benefit from some error-checking)-cum-amateur precious metal pundits claiming that the gold bubble is unmistakable. On the other, there are those who have made hundreds of millions of dollars for their investors actually investing in precious metals, such as in this case Sprott's John Embry, who states that there is no bubble in either gold or silver. "Jim Rogers, who is one of the world's leading authorities on commodities, dealt with the bubble issue recently by recounting an interesting anecdote. While addressing a group of high-end money managers, he inquired as to how many of them held gold or silver in their accounts, and remarkably, 75% replied they had never owned either precious metal. When gold is trading at several multiples of the current price at some point in the future, you can be assured that every single person at a similar gathering would be long and then discussion of a bubble might be legitimate. In my considered, opinion we are many years and thousands of dollars away in price from that debate." Whom does one believe? That's obviously rhetorical. Amusingly, Embry takes a stab at the Financial Times, which he dubs a conduit for the establishment: "The FT has been speaking much less disparagingly about gold recently. The paper consistently denigrated gold and its change in tone might be instructive." Of course, a variety of second-rate media outlets are more than happy to step in and fill the "goldbug" bashing void in the FT's absence. Full recent thoughts from Embry (pdf):   Embry Oct22

Edwin Vieira: Gold must replace the corrupt U.S. monetary system Posted: 25 Oct 2010 09:59 AM PDT 4:56p CT Monday, October 25, 2010 Dear Friend of GATA and Gold: Hinde Capital Ben Davies' wasn't the only great speech delivered last week at the fall dinner meeting of the Committee for Monetary Research and Education in New York. Also speaking was constitutional lawyer, historian, scholar, and GATA consultant Edwin Vieira, author of the magisterial history of the monetary system of the United States, "Pieces of Eight," who made a stirring appeal for the replacing the authoritarianism, corruption, and dysfunction of that system with a gold-based system. The paper from which Vieira's address was drawn is titled "A Cross of Gold" and you can find it at GATA's Internet site here: http://www.gata.org/files/Vieira-ACrossOfGold-10-21-2010.pdf Last year's subscription campaign to undertake a reprinting of "Pieces of Eight" was not successful but Vieira announced at the CMRE meeting that such a reprinting soon will be under way thanks to a grant from the GoldMoney Foundation, whose founder, James Turk, is also a consultant to GATA. We'll publicize the new availability of "Pieces of Eight" as soon as it's ready. In the meantime, you can find Turk's review of "Pieces of Eight" here: http://www.gata.org/node/7536 CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Resource Goes Into Production at Ulaan Ovoo Coal Mine in Mongolia A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there. For the company's complete announcement, please visit: http://www.prophecyresource.com/news_2010_oct14.php Join GATA here: New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 Attachment Size Vieira-ACrossOfGold-10-21-2010.pdf 216.78 KB This posting includes an audio/video/photo media file: Download Now

CFTC should target runaway robotic trades, Commissioner Chilton says Posted: 25 Oct 2010 09:34 AM PDT By Christopher Doering Reuters Monday, October 25, 2010 http://www.reuters.com/article/idUSTRE69O48C20101025 WASHINGTON -- Computer-generated algorithmic trades have run amok in markets more than once this year, and U.S. regulators should look for ways to hold traders accountable, a top official on the Commodity Futures Trading Commission said on Monday. Bart Chilton, a commissioner with the futures regulator, said "mini-flash crashes occur all too often" following a surge in high-frequency trading. Securities and futures regulators have been trying to determine ways to prevent another event like the May 6 "flash crash" when markets temporarily plunged. The CFTC on Tuesday will unveil new draft rules to clamp down on disruptive trading practices. ... Dispatch continues below ... ADVERTISEMENT Prophecy Resource Goes Into Production at Ulaan Ovoo Coal Mine in Mongolia A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there. For the company's complete announcement, please visit: http://www.prophecyresource.com/news_2010_oct14.php "They don't cause as much of a disruption as that of May 6, but more than once this year, runaway algos have disrupted markets. By that I mean, cost people money," Chilton said in prepared remarks for an energy conference in Las Vegas. "We should explore ways to hold those who set off runaway robotic trades accountable," he said. At least one algorithm is know to have disrupted the oil markets this year. Infinium Capital Management said in August it was the company at the center of a six-month probe by CME Group Inc into why a new trading program malfunctioned, racking up a million-dollar loss in about a second on February 3. The regulatory agency faces tight deadlines to write regulations to implement the Wall Street reforms that Congress passed in July to increase oversight of the $615 trillion over-the-counter derivatives market. The CFTC hopes to unveil the first drafts of all proposed rules by the end of the year to allow time for public comment and revisions before its July deadline for final regulations. Some measures have earlier deadlines, including speculative position limits in energy and metals markets, which must be finalized in January. Chilton questioned whether there should be position limits for financial futures. "Given our experience with the Flash Crash, however, and the key role one financial futures market appears to have led in the domino decline, I'm wondering if it is appropriate to consider limits in these markets as well," said Chilton. Regulators are trying to ensure that commercial end-users, who are exempt from having to clear trades and post margin, do not face higher costs for hedging with swaps. Swap dealers and major swap participants will be required to clear most swaps, and will have extra capital and margin requirements. "It's clear that we need to exercise some caution when we write those definitions (for swap dealers and major swap participants) so that legitimate hedgers are not inadvertently pulled into the categories," Chilton said. Hundreds of firms are lobbying the CFTC for exemptions from regulations or for favorable interpretations of the new law. "Others think we should ignore the deadlines Congress gave us and phase this stuff in over years and years. Well, sorry Charlie," said Chilton. "That's not going to happen." * * * Join GATA here: New Orleans Investment Conference Wednesday-Saturday, October 27-30, 2010 Hilton New Orleans Riverside Hotel http://www.neworleansconference.com/redirect.php?page=index.html&source_... * * * Support GATA by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

The G20 Was A Dud, So What Now? Posted: 25 Oct 2010 09:27 AM PDT From Nic Lenoir of ICAP Surprise surprise, the G20 was a flop. At least the Brazilian delegation had the good taste of not wasting the use of a private plane, a few suites, and that meant more hors d'oeuvres for Tim and Ben. Nothing was achieved, the final statement was about as non-committal as the fine print of any official document nowadays. German officials actually called out the US hypocrisy of talking down currency intervention when excessive monetary largesse has for only consequence an implicit devaluation. So if anything we know that we can't really count on any cooperation in the future. And Japan reminded everyone it would do whatever is needed to prevent excessive appreciation of the Yen, though people still wonder where the BOJ was at when USDJPY printed new lows. Markets jumped the gun and initially looked at this as a "risk-on" / status quo opportunity. However I am not so sure we can see much more in that domain until the Fed lets the cat out of the bag for good. After all equities had a run up of 10% over the last couple months, the dollar index has sold of 12% since June, and a lot of that move has been driven by quantitative easing expectations, so would seem to me a bit ambitious for traders to turn around and add to positions or initiate fresh ones one week ahead if the actual announcement (unless Ben spilled the beans over a harvest of Korean BBQ this past weekend). Gold, if it breaks above 1,350 will clearly make a case for further extension of the QE trades that drove the market the past few weeks and as long as 1,328 is not violated on the downside it is possible to view the price action here as constructive. For the reasons mentioned above I would wait for a break rather than try to front run the herd front-running the Fed. The Shanghai composite also looks like it peaked its head above resistance and triggered a bullish exit after flagging but that market is tricky enough and uncorrelated enough to Western equities that I would gladly wait to see some follow through being endorsed more broadly than just take that Index's price action at face value. That is why I walked in this morning a bit suspicious of the price action overnight and I will remain so until we see a clear reversal of the buy signal in the VIX (see chart), crude oil breaking out above 84.5/85 (in which case traders should definitely get long), or the DXY make a fresh low. USDCAD seems to me like it is consolidating after the initial impulse. EURUSD and AUDUSD are a bit difficult to read. In terms of Elliott they don't really exhibit too much bearish characteristic but they are so choppy it would not be surprising if they consolidate more and have wide trading swings. The Dax is very interesting. After indicating the 6,675/6,750 as a potential topping area last week, we tested the lower end of this range this morning and left an inauspicious candle on the highs after gaping up. Should we gap down at or below 6,634 on open tomorrow in fact we would have an island reversal which is quite bearish to say the least. Treasury futures' behavior was a bit peculiar today. After going vertical off of the the H&S neckline/support, the market reversed quite abruptly in the afternoon following the TIPS auction which was the first ever negative yield print. While I really like the idea of owning TIPS in case the Fed cannot manage the impossible task of successfully creating inflation without it being hyper, one thing occurred to me: the coupons are based on CPI which is the most manipulated data series out there or close enough to a tie with NFP. According to shadow stats reading were north of 6.5% during the last Fed hiking cycle if one used the definition prevalent in the 80s (stated from memory, facts might not be absolutely accurate but definitely the idea is there, apologies for the slight lack of precision). However your coupon would have paid you based on the much lower official reading of the CPI. While in the case of hyperinflation it would be hard to use enough gimmicks to mask the extent of the robbery taking place, you're still getting robbed of a solid 4% on your coupons... And to believe the Fed and the Treasury have input as to how the CPI is calculated when it precisely impacts the interest paying burden of the country or the credibility of its policies is of course a wild assumption made by ill-advised conspiracy paranoids... or is it? Food for thought. Even though you will probably get robbed owning TIPS, it could turn out to be a lesser evil if the dollar starts moving below the key 74.90 support and if anything today's auction's results might have made the longs of Fixed coupons a bit more uneasy at these yields levels. Good luck trading, Nic

Tiny Tim’s Big Fantasy Posted: 25 Oct 2010 09:27 AM PDT Markets were mostly flat on Friday. Then, this weekend, US Treasury Secretary Geithner proposed to the world's finance ministers that they cap their current account surpluses at a fixed percentage of GDP. How would that work? Why do it at all? What's the point? Oh…we were going to answer those questions. But then, we said to ourself, 'why bother?' The whole thing is a fantasy. A hallucination. And a scam. It doesn't deserve a serious discussion. Geithner is the secretary of the treasury of the world's largest economy. There is no evidence — none — that he has ever actually understood what is going on. If he had understood he certainly never bothered to say anything… …that is, about the credit crisis…about de-leveraging…about the threat of too much debt…and everything else that has happened over the last three years. Instead, all he has done is REACT to the crisis as it developed…always in the same way, by attempting to avoid any big change or any big losses to the people who most deserve them. Of course, the markets were clearly signaling the need for a major change of direction. The biggest, and formerly most profitable, financial corporations in America were faced with bankruptcy…and millions and millions individuals were in big trouble too…. …but Geithner didn't understand any of this… Still, he's the guy who's now suggesting HUGE new rules that the whole world will have to live by. Countries capping their surpluses? It is equivalent to individuals putting a limit on how much they save. What's the point of it? It would force the savers to spend…and thereby, presumably, reduce the value of whatever currency they spend (by increasing the demand side of the equation). What currency will they be spending? Easy, they'll spend the currency they are saving — dollars! Oh that Tim Geithner! What a clever guy. Put a cap on savings and you force people to spend dollars…driving down the value of the dollar and thereby simultaneously decreasing the real value of US external debt…and making US products and services more attractive to foreign buyers. Well, our hat's off to Mr. Geithner. The man has come up with an unworkable plan that no foreign nation will actually implement in any serious way. Actually, it is a nutty plan. Forcing people to spend money? Are you kidding? It just shows how little he really understands. A real economy cannot be ordered around or organized in such a heavy handed way. Price controls, central planning, government management of business and investment — they all always fail. Still, he's … at least he's trying, right? Give the man credit for that…the numbskull. And more thoughts… "The French are crazy. What do they think they are doing?" The comment and question came up at a cocktail party. Our youngest son is in the French school in Washington. Occasionally, we are invited to meet other parents. "My wife is French," continued a new friend, a former banker with the IMF. "We live there part of the year and have a house near the Swiss border. But I'm thinking of selling everything in France and moving all my assets out of the country. "There is no way that this is going to end well. I mean, they're shutting down the country because Sarkozy is proposing to increase the retirement age from 60 to 62. They must be dreaming. Sarkozy is not increasing the retirement age because he is a mean fellow. He's doing it because he knows the country can't afford not to do it. "It's such a modest little reform. They actually need to do much more. Like they're doing in England. But the French are so funny. At the smallest provocation they take to the streets. They set cars afire. They think that if they are politically active and powerful enough, the money to finance these things will magically appear. But it won't. And they'll have to come to grips with reality sooner or later. "The real problem is that the promises made by the welfare state are just too ambitious. As long as the economy is on the up and up people think they can afford to expand these benefits. Each generation thinks it deserves more than its parents, because it is richer. But the trouble is that the politicians can expand the claims on wealth faster than wealth itself can expand. "And then, when it becomes clear that wealth is not expanding as fast as people had hoped, all the forecasts and the projections are shown to be nonsense. The people have been promised things that they can't possibly afford. And sooner or later some government has to come to terms with it. Sarkozy is just the beginning of the story. He's just barely tackling the real problem. He'll have to make much more dramatic cuts in order to make the budget work. "You know, Europe agreed to limit deficits to 3% of GDP. The idea was the countries would lose their voting rights in the European Union if they went over that limit. France is now at 8%. There is no question that they're going to take away France's votes. It just isn't going to happen. "But France is in trouble. And if it can't deal with its problems in a reasonable way, the problems will just get worse and worse…until they finally explode. How? When? I certainly don't know. But I do know that there is no way France can continue spending money the way it is now. "And I also know that the US is not that different. It actually has more debt than France. The average Frenchman doesn't have nearly as much debt as the average American. And at least the average Frenchman knows there is a problem. He just doesn't understand it well enough to do anything serious or smart about it. "But the average American doesn't even know he has a problem. And while Sarkozy is at least beginning to trying to bring government spending into line with likely revenues, in America that conversation really has not even begun. "In some ways, the US is much worse off than France. Neither its leaders nor its voters seem to have any idea of the problem that awaits them. "Maybe I should sell all my assets in the US too." Regards, Bill Bonner, for The Daily Reckoning Tiny Tim's Big Fantasy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

MONDAY Market Excerpts Posted: 25 Oct 2010 09:25 AM PDT Gold climbs again as dollar falls after G20 meeting The COMEX December gold futures contract closed up $13.80 Monday at $1338.90, trading between $1329.30 and $1349.50 October 25, p.m. excerpts: (from Reuters) Gold rose 1%, resuming its rally after its first weekly decline in nearly three months, as a G20 agreement hardened expectations that the Federal Reserve will pump more money into the economy. The dollar fell broadly after the G20 agreed to shun competitive currency devaluations but stopped short of setting targets to reduce trade imbalances. "You have this prospective QE2, dollar weakness, inflation fears," observed Carl Firman, analyst at Virtual Metals. "It's a very bullish picture for gold."…more (from TheStreet) "The G20′s hardened stance towards exchange rates has been interpreted as dollar-negative and should now defer further talk of 'currency wars,' and with it the threat of concerted central bank action to stem the downward moves in the dollar … ," explained RBC Wealth Management's senior vice president George Gero. "With this threat receding for now, it makes further downward moves in the greenback more likely, in view of the fact that pretty much everyone expects the U.S. to now announce its second round of quantitative easing … "…more (from Bloomberg) Gold futures rose the most in more than a week as the greenback dropped as much as 1% against a basket of major currencies, boosting demand for the precious metal as an alternative investment. "The Fed has put the world on notice that the dollar can no longer be viewed as a safe-haven currency," said Michael Pento, senior economist at Euro Pacific Capital. "During the next crisis, investors should seek the safer harbor that is derived from owning commodities and precious metals."…more (from Dow Jones) Gold prices are also garnering support from the broader rally in commodities, which signals higher inflation ahead. Commodities from cotton to copper have set price records in recent weeks as unusually bad weather and low crop yields impacted supply. This will likely flow through to raise inflation in the next 12 to 18 months, and is seeing some investors buy gold as an inflation hedge, according to George Gero, vice president with RBC Capital Markets Global Futures…more see full news, 24-hr newswire…

Where can we find 20,000 tonnes of gold? Posted: 25 Oct 2010 09:02 AM PDT The entry of China, Russia, India and a growing list of other politically-motivated nations into the market as limitless buyers of gold has created enormous difficulties for the old guard of interventionists, and a solution is desperately needed. It has developed into a power-struggle between this old guard, which is trying to manage a way through a crisis of its own making, and the new which so far has not managed to acquire enough bullion. Furthermore the new is building up excessive amounts of fiat paper issued by members of the old; paper which they know is loosing value at an increasing pace. On this basis gold is simply underpriced in paper currency terms.

Gold and SP 500 December Futures Daily Charts Posted: 25 Oct 2010 08:56 AM PDT This posting includes an audio/video/photo media file: Download Now

More Nukes! Posted: 25 Oct 2010 08:53 AM PDT William "Willie" Sutton (1901–1980) was a notorious American bank robber. According to FBI records, he stole over $2 million during a criminal career that spanned 40 years. To be sure, Sutton got caught on numerous occasions, and thus did he spend over half his adult life in prison. But Willie Sutton was as intellectually honest as he was criminally dishonest. When a news reported asked Sutton, "Why do you rob banks?" Willie answered, "Because that's where the money is." In his biography, Where the Money Was: The Memoirs of a Bank Robber, Willie Sutton expanded upon this perspective. He said, "Go where the money is… and go there often." Similarly, as an investor, I pursue a similar philosophy: Go where the natural resources are…and go there often. In a world with growing population, growing prosperity, increasing demand and decreasing availability of energy and mineral resources, there have to be great investment opportunities in these resources. Indeed, that's where the money is. We should go there, and go there often. In the energy sector, different fuel sources contain different amounts of energy per mass. That is, if you burn a block of wood, you'll get a different amount of energy than if you burn a gallon of gasoline or diesel fuel or a pound of uranium. These differences influence the investment appeal of each fuel source. The table below presents the energy density of various fuel sources in terms of megajoules of energy per kilogram. A megajoule — MJ — is 1 million joules, or approximately the kinetic energy of a 1-ton vehicle moving at 160 km/h (100 mph). The point is to show that if something has a high energy density, then less physical material will release the same amount of energy. You can see why, for example, old wood-burning locomotives and steam engines gave way to coal-burning equipment. And the coal-burners eventually yielded to diesel engines. You just get more energy from the same volume of material, which matters when you're in the confined spaces of a moving piece of equipment. It's obvious, based on the raw numbers, that uranium — and by extension nuclear power — can supply energy with a density that's orders of magnitude more than what you get from carbon-based fuels. With numbers so utterly lopsided like these, the world is going to find it impossible to support massive populations and deal with resource and energy demand without a global nuclear power industry. The long and short of it is that the world is going to move toward nuclear power. That's why I have recommended investments in long-term uranium players like Cameco (CCJ: NYSE), and Denison Mines (DNN: AMEX), as well as direct investments in uranium via Uranium Participation Corp. (U: TSX). What about alternative energy sources, you ask? What about solar and windmills, for example? Every energy method has its uses and attractions. But the energy density of solar and wind is quite low. Sure, solar and wind have a place in many niche energy applications, but not for meeting the looming energy demands of billions of people. For the next 30 or 40 years, the alternative energy methods will move toward the 5–7% range of overall world energy supply. But for the "big power," you need to keep focused on nuclear energy. Regards, Byron King, for The Daily Reckoning More Nukes! originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

California Dreamin’ Posted: 25 Oct 2010 08:32 AM PDT California's Napa Valley gets the headlines, the wine-tasting awards and the black-tie charity dinners…California's "Emerald Triangle" gets the cash. That's right, the Golden State's marijuana crop generates about $14 billion in revenue each year, and most of that revenue flows into the three main cannabis-growing counties of Humboldt, Mendocino and Trinity — aka, the Emerald Triangle. $14 billion may not seem like much, as it is roughly the same sum as the bonus pool at Goldman Sachs. On the other hand, $14 billion is larger than the GDP of Iceland, double the GDP of Nicaragua…and seven times larger than the revenue of the California winegrape industry. A few miles to the south of the Emerald Triangle in Napa and Sonoma counties, an array of deep-pocketed vintners and gentleman-farmers try to squeeze profits from grapevines. Very few succeed. California winegrape production generates only about $2 billion in gross revenue annually, and virtually no profit…on average. Thus, the California "weed" industry produces seven times more revenue than the state's massive winegrape industry. This contrast may not mean anything in particular, but it may not mean nothing either. Up in California's verdant north, cannabis plants flourish as bountifully as liberal politics…and budget deficits. As a result — of the politics and the deficits — the Golden State has become a high-tax, quasi-socialist domicile that has become increasingly hostile to private enterprise. Once upon a time, the massive California economy featured shipyards, oil refineries, lumber mills, aerospace factories and many other forms of "heavy industry." Not any more. The modern California economy features a few legacy heavy industries — that continue to operate only because they had not yet been regulated out of existence — along with a quirky combination of light industries like tourism and marijuana cultivation. If, as a former Morgan Stanley analyst once observed, "Europe is a vast open-air museum," California is quickly becoming a vast open-air love-in, where the marijuana and good vibes flow freely…as long as Mom and Dad don't forget to send cash. But Mom and Dad are having a hard time paying the bill these days. The longer the good vibrations in the public sector persist, the tougher it becomes to keep the love-in going. Back in 1978, California chose a path that determined much of its ensuing future. The state voted itself a big tax cut. Proposition 13 — officially titled the "People's Initiative to Limit Property Taxation — amended the California Consitution in 1978 to limit property taxes to a maximum of 1% per year. This feel-good amendment, which slashed property taxes by an average of 57% overnight – inspired a national "taxpayer revolt" throughout the country. Suddenly, Americans began to believe that they could, in fact, have something for nothing. In 1978, California enjoyed a robust budget surplus. The economy was humming along and there seemed no reason not to believe that benefits could and should increase for everyone, especially for everyone who drew a paycheck from the state itself. Thus began the legendary tales of tenured university professors who work as hard as welfare recipients to receive six-figure paychecks, subsidized housing and a lifetime of generous retirement benefits. Likewise, the outlandish stories of municipal police officers who receive $150,000 in total compensation, or the state lifeguards who "tactically retire" on "disability" so that they may receive lavish lifetime pension and medical benefits, while also generating a second income working somewhere else. But these are stories for another day… Today's story relates to a different historical footnote from 1978. Republican candidate for governor, Evelle Younger, crafted an election platform that included constructing 30 new nuclear power plants along the California coast. Younger lost the election by a landslide to Jerry Brown, the ultimate feel-good candidate. We did not need nuclear power, Brown countered, anymore than we needed those billions of dollars of property tax revenues that Prop.13 eliminated. This was California, the Golden State…the dreamiest portion of the American Dream. As it turns out, California probably could have used a few extra property tax dollars…as well as a few extra nuclear power plants. Because the state lost half its property tax revenues, it became dangerously reliant upon other forms of taxation, like income and capital gains. Since these latter two forms are uneven and unpredictable — and tend to drop when they are most in need — the State's income tax rate steadily increased…which placed an increasing burden on the private sector. Meanwhile, over in the power-generation sector, nuclear energy's share of California energy production has dwindled to a paltry 12%. Three decades of No Nuke sentiment in the state — epitomized by the Diablo Canyon protests in 1981 — completely thwarted every effort to increase nuclear power production. One ironic, unintended consequence of the 30-year anti-nuke campaign is that coal-fired power plants now generate more electricity in California than nuclear plants. But political opinion tends to oscillate between extremes. The "bad" policies of one generation become the "good" policies of the next. Thus, "bad" nuclear energy will return to California one day…just like it is returning to the rest of the planet. In fact, nuclear energy is enjoying a global renaissance — once that will produce numerous profit opportunities for forward-looking investors. Eric Fry for The Daily Reckoning California Dreamin' originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

Grandich Client Spanish Mountain Gold Posted: 25 Oct 2010 08:30 AM PDT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! October 25, 2010 12:10 PM One of the things I pride myself in is to try and find emerging producers. This is where many times the biggest buck comes in. An advanced stage exploration project that pretty well looks like it could become a mine or one that has become a mine and still has a lot of exploration potential. SPA's (Spanish Mountain Gold) project has a significant deposit in BC that is now well advanced. I think on the back of an envelope that you can make an argument that barring anything unforeseen, it looks like it can become a mine. And it still has very significant exploration potential. *SPA has been steadily de-risking the project over the last year or so and it seems that plans are in place to take the project further down the development path.* I would consider SPA a development story and they are not depending solely on drill r...

Broke States Or Stock Selloff: The Capital Gains Tax Dilemma Posted: 25 Oct 2010 08:25 AM PDT With just two months until the end of the year, the one most important issue facing the US economy, which incidentally is not how many trillions in new, never to be used (or used only upon the case of hyperinflation) dollar bills Ben Bernanke will issue on November 3, but what the fate of the Bush tax cuts will be, and especially that of capital gains tax, remains still unresolved, Bloomberg has done a good analysis that frames the dilemma for the crippled administration: insolvent states or a market sell off. One would hope that with Geithner's track record vis-a-vis taxes, the former would take precedence, although as Blankfein has been rumored to seek the capital to expand his 15 CPW duplex into a triplex, the final outcome is pretty much clear, and it likely means little if no change to cap gains taxes, and thus no sell off in stocks. The problem is, however, that California, the state with the biggest economy, projects taxpayers’ capital gains will grow 40 percent this year while New York, the third-most-populous state, forecasts a 59 percent increase, or roughly 24% from the current 15%: an event which would have rather dramatic implications on investors desire to close out positions well before January 1. Should these states not be able to recoup revenues from actual capital gains receipts, then a federal bailout is virtually assured. Bloomberg explains further: California and New York, after closing budget deficits of more than $27 billion this year, may face $1.3 billion in combined new gaps if the federal capital- gains tax rate doesn’t rise as scheduled, state documents show. Both count on increased revenue -- $1.1 billion in California and as much as $225 million in New York -- as investors rush to sell assets before the federal capital-gains tax rate goes up to 20 percent, set for Jan. 1. Currently it’s 15 percent. Nationwide, realized capital gains may jump $122 billion, or 29 percent, to $540 billion this year, according to the Congressional Budget Office. In 2003, Congress temporarily cut the federal tax on profits from assets held at least a year. Last month, lawmakers put off action on whether to extend the expiring lower rate beyond December until after the Nov. 2 elections. Surging asset sales ahead of the pending increase “could fuel an inflow at the state level,” said Scott Pattison, executive director of the National Association of State Budget Officers. If the rate doesn’t change, then states may not see a jump in related revenue, he said. We doubt the insolvency of states will cause many sleepless nights to those barons of Wall Street whose net worth is most closely tied to the S&P. Furthermore, California, with its $19 billion deficit is a lost cause: a few billion here or there won't do jack to improve its position. Yet, various states will be quite disappointed and petition the Fed even harder to make up for the shortfall with even more unlimited taxpayer funded bailouts. Because of weak prices for equities and homes in the past few years, U.S. income from capital gains in 2010 is projected to be 42 percent less than the $924 billion peak of 2007. Stocks, measured by the Russell 3000, are 5.3 percent higher than the average of the past 10 years. Home prices are 5.8 percent lower than the 10-year average. New York expects $200 million to $225 million in additional revenue from investors accelerating their sales to take advantage of this year’s federal capital-gains rate, according to Erik Kriss, a state Budget Division spokesman. The Division of Budget projects a surge in realized capital gains, to $57.7 billion in 2010 from $36.4 billion in 2009. Not surprisingly, it's not only California. New York State, where Wall Street is located, reported a material miss to budget "New York’s tax revenue for the past six months trailed forecasts by $529 million, according to an Oct. 19 report by Comptroller Thomas DiNapoli. " And here is where Keynesianism raises its ugly heads: there is always the possibility that even with new funds, these will be used to support a bloated state-level infrastructure instead of going to filling deficit holes: “A problem arises when legislators use the additional funds to support spending and ignore the fact that it’s an increase that won’t necessarily last,” said E.J. McMahon, executive director of the Empire Center for New York State Policy. The Albany group advocates for lower state spending. At the end of the day, none of this will do anything to prevent a domino-like financial collapse of US states.  States are looking at big budget problems all the way into 2012 and probably 2013 as well,” said Nick Johnson, director of the State Fiscal Project at the Center on Budget & Policy Priorities, a research and advocacy group in Washington. As for revenue surges from taxpayers trying to avoid a higher federal-tax rate in January, “any gain they get in fiscal year 2011 will be offset by a loss of revenue in the following year,” he said. Which is why the administration, which as Neil Barofsky demonstrated earlier is only preoccupied with making Wall Street whole at the expense of 99% of the population, will likely not only not increase capital gains, but in fact lower these, to prevent the widely expected tax-predicated sell off at the end of 2010. Then again, who knows. The level of chaos in the halls of the White House is currently at record levels, as nobody has any clue what on earth they should be doing to prevent the depression from accelerating. Finally, the only thing that does matter, is what Ben Bernanke will decree. After all, he is the only true high priest of the world's biggest economy.

Treasury Draws Negative Yield for First Time During TIPS Sale Posted: 25 Oct 2010 08:21 AM PDT Oct. 25 (Bloomberg) — The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in halting deflation. The securities drew a yield of negative 0.55 percent, the same as the average forecast in a Bloomberg News survey of 7 of the Federal Reserve's 18 primary dealers. The sale was a reopening of an $11 billion offering in April. Conventional Treasuries rallied amid speculation about the amount of debt the Fed may purchase to spur the economy in a strategy called quantitative easing. "It signals people's expectation of the Fed being able to create some inflation with the QE program," said Alex Li, an interest-rate strategist in New York at Deutsche Bank AG, one of 18 primary dealers required to bid at Treasury auctions. "With nominal rates so low, in order have high TIPS breakevens you've got to have negative real yields on the five-year." [source] PG View: So investors are now paying the government for the privilege of buying TIPS. It is a clear acknowledgment by the bond market that the Fed will indeed be successful in manufacturing inflation via quantitative easing…no matter what it costs. Given the Goldman Sachs report discussed in The Morning Gold Report today, which suggests Fed funds at 0% are 700bp too high, I think you can add negative yielding TIPS to the "new normal."

Major Volume Supporting The U.S. Dollar As Gold And Silver Come Under Pressure Posted: 25 Oct 2010 08:12 AM PDT Secretary Geithner is trying to give support to the currency as the tensions have grown on a devalued dollar. This past week he has stressed the importance of a sound currency. The U.S. definitely wants to devalue the dollar in a ... Read More...

The Eiffel Tower’s (Fiscal) Imbalance Posted: 25 Oct 2010 08:05 AM PDT Despite the recent end to the oil blockade in Marseille, France, the gas shortages continue. About a fourth of French gas stations are completely out of fuel. This, because the protesting citizens have gotten used to the government's old retirement age of 60 and can't bear the thought of working until 62. Like anyone that's grown accustomed to having things a certain way, they're not exactly very receptive to change. And, it's happening around the world… governments of historically wealthy industrialized nations have maxed out their welfare economies and are slashing expenses wherever they can. It's just a matter of time until the austerity tidal wave crashes onto US shores. The Eiffel Tower's (Fiscal) Imbalance originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

The Killer of Drillers Posted: 25 Oct 2010 08:04 AM PDT by Addison Wiggin How Bernanke’s clone is killing U.S. offshore drilling... despite the “lifting” of the ban Drilling neglect at home means opportunity overseas... New developments in the oil kitchen Goldman puts a price on “QE2”... Would you believe $4 trillion? The chart that bodes ill for tomorrow’s Case/Shiller home price report Readers sound off on China’s rare earth maneuverings, reply to the query, “How’s business?” In an audacious attempt to regulate and control the offshore drilling industry, Washington insiders have taken a bold new step: They’ve cloned Ben Bernanke. Each new generation of clones has some minor defects -- hence the glasses. But allow us to introduce Michael Bromwich. Since coming out of the test tube, Bromwich has been the No. 1 guy at a mouthful of a bureaucracy called the Bureau of Ocean Energy Management, Regulation and Enforcement. When the Obama administration lifted the ban on deep-water oil drilling a couple of weeks ago, it was Bromwich who was tasked with responding in The Wall Street Journal: “A safe, secure energy future for our nation,” the meme wrote earnestly, “begins with a strong, effective regulatory and enforcement program… As we build that program, we will remain focused on safety, not politics.” Indeed.... safety through bureaucratic inaction. “One way to determine the level of government commitment to safety,” writes our Byron King, who’s been a leading analyst in the field since the Deepwater Horizon met its demise, “is by looking at the job postings at Department of Interior for the Bureau of Ocean Energy Management, etc. “There are a slew of new regulations about offshore development, with more in the pipeline (ahem). And there’s an admitted shortage of qualified personnel to administer the new, more complex, ‘safer’ process for obtaining government permits for offshore drilling. “Yet, a review of current job openings at the agency reveals only… One IT specialist Two engineers, each paid $47,488 a year And four summer interns paid $13.41 an hour. “Not exactly a welcome committee for drillers seeking new permits.” “Over the coming year,” Bromwich has tried to explain, “BOEM anticipates adding scores of inspectors and engineers to its staff. My hope is that we can add as many as 200 new inspectors, engineers, environmental scientists and other key staff to support our agency in carrying out its important oversight functions.” “He ‘hopes’ to have 200 people? That’s nice.” Byron says. “This is the backside of the BP disaster; the legacy of a hastily imposed moratorium. Clearly, the government is in over its head.” [Ed. Note: No doubt, at this time next year, the BOEM will look like the Department of Defense -- which ballooned from 1,868 civilian employees making more than $150,000 a year to 10,100 in the short 18 months between December 2007 and June 2009. Or the Department of Transportation which had only one person earning a salary of $170,000 or more before the Bailout & Stimulus (BS) era began. “Eighteen months later,” says USA Today, “1,690 employees had salaries above $170,000.” In the meantime, deep-water drilling continues unabated... overseas. Diamond Offshore moved two Gulf drills to Africa in July. Transocean did the same in September. And this is just the beginning. If you’re a reader of Outstanding Investments, you know the mendacity of the politics involved really chafes Byron’s hide. But at the same time... it’s great news for a tiny African oil player that’s been on his radar for well over a year. A host of Canadian financiers have just approached the company -- unsolicited -- about putting up $30 million to help finance its operations. Thus, the company “is starting to appear on the radar screens of big-time energy value investors,” says Byron. “The story is moving out of the deep recesses of energy investing into the forefront of pension fund and wealth-management respectability.” We’ve withheld the name of the company here in The 5 out of respect for paying subscribers who’ve got dibs on it... but it’s not too late to be in place for the tiny stock’s big move. Still, time is of the essence. Next month, the firm throws open its seismic and geochemical data for potential partners to examine -- another short-term catalyst. Byron’s enthusiasm for this company is infectious -- you can catch the bug here. We’d heard rumors the FDIC had placed their own moratorium on gobbling up failing banks, at least until after next week’s election, but Friday, that rumor was proven false. In fact, they even picked up the pace a tad... swooping down on seven banks after the close of business. The biggest of the bunch was Hillcrest Bank, in the Kansas City suburbs, plus two in Florida, two in Georgia, and one each in Illinois and Arizona. The body count for 2010 is now 139 -- one shy of last year’s total. The dollar-down-everything-else-up trade is on again as the week begins… The dollar index has broken below 77 Gold has firmed up more than $7, to $1,336 The major stock indexes are up 0.5%. Conventional wisdom attributes this to the inconclusive G-20 meetings over the weekend. But did anyone really anticipate they’d be conclusive? We suspect the following news item weighed a little more heavily this morning on the buck. Goldman Sachs says the Federal Reserve may have to buy up to $4 trillion in Treasuries and other “assets” to shock the U.S. economy’s failing heart back to something approximating a normal pulse. For starters, “We expect an announcement of $500 billion or perhaps slightly more over a period of about six months” when the Fed meets next week, says Goldman’s chief U.S. economist Jan Hatzius. Will that be enough to keep stocks pumped? A lot is riding on whatever the Fed decides a week from Wednesday. Time magazine says it “could be the most important meeting in Fed history.” Maybe, maybe not. But we do think it’s important enough that we’ve called our editors to Baltimore on Thursday for an Emergency Summit. We’re asking them for their very best ideas at this critical juncture… and we’re going to give you a chance to listen in. Watch this space for details. A little-known index of home prices shows an alarming two-month price decline. Data compiled by Clear Capital reveal a 5.9% decline from mid-August through mid-October -- a pace last seen in March 2009. Prices are now back where they were just before the homebuyer tax credit expired in April. The trend looks even more alarming when plotted alongside the Case-Shiller Home Price Index… Heh… Case/Shiller comes out tomorrow… We’ll bring you the gory details right here. Over the weekend, China joined the long list of G-20 nations who told Treasury Secretary Tim Geithner to go fly a kite. Geithner proposed Friday at a summit of G-20 finance ministers in South Korea that the nations agree to limit their trade surpluses and deficits to 4% of GDP. Since China was the clear target of Geithner’s proposal -- it’s a backdoor way to revalue the renminbi -- China was content to let everyone from Japan to Russia dis it first. Geithner’s Saturday went from bad to worse when the German economic minister said loose monetary policy in the United States amounted to “manipulation” of the currency -- the very thing boorish U.S. politicians accuse China of. Oooh, that one hurt. Sunday, Geithner was reduced to a follow-up meeting with China’s vice premier, after which he admitted the Chinese “need the flexibility to run their policies in a way that makes sense for China. And that requires that their exchange rate move up over time as they’re now doing...” The part about “on a timetable of their choosing” was merely implied. Japan’s trade minister has formally appealed to China to lift its ban on exports of rare earth elements to Japan. Considering China has never acknowledged the ban it imposed last month -- or one imposed on the United States last week, for that matter -- we’re eagerly awaiting their response. If you didn’t catch last week’s sexy, fast-moving rare earths developments, we compressed the essentials into one minute and 35 seconds on Friday. Take a look: Meanwhile, some more interesting geopolitical maneuvering was made possible gratis of the rare earths squeeze over the weekend. India’s prime minister invited Japanese experts to help bring India’s rare earth deposits into production. For all the handshakes and smiles between India and China these days, they remain strategic rivals; they fought a border war in 1962 that remains unresolved. The developments are worth keeping an eye on... [Ed. Note: For another lucrative opportunity in rare earths with its own history rooted in the ‘60s, check out this presentation from Chris Mayer.] “Ignorance and panic selling in the short term,” writes Ray Blanco of another unintended consequence of the rare earths chatter, “give us a buying opportunity for the long term.” Since you need rare earths to make wind turbines, and one of Ray’s picks designs and licenses turbines, the news could be better for our newest publication Technology Profits Confidential. But, says Ray, the designs for these particular wind turbines rely on rare earths less than others. And many of its biggest licensees… are in China. Indeed, at this point, a spate of panic selling can work to your advantage. The long term is how fortunes will be made from the six technological breakthroughs that Ray and Patrick Cox see coming. Learn about all six right here. “The Chinese,” writes a reader also in response to our rare earth coverage, “are doing what will put any company manager in jail in the U.S.: They first reduce the price of their product artificially and send all their competitors bankrupt, and then curtail production and reap lucrative prices. “They also use the process to damage other countries that they do not like by blocking export to these specific countries. This is economic warfare, pure and simple. The only response should be of blocking import of all products containing rear earths from China.” “Why is it illegal,” writes a reader who we suspect would disagree, “for the Chinese government to subsidize Chinese companies involved in developing green energy, but it’s all right for the U.S. government to assist U.S. companies by their quantitative easing and other measures? “And why can’t the Chinese reduce or stop export of rare earth metals to the U.S. but its all right for the U.S. government to prevent the Chinese from acquiring Unocal? Does the U.S. arrogate to itself the right to set all the rules of global commerce and trade and expect all other nations to play by its rules?” “The shortage of non-Chinese rare earth production,” writes a third, “is a function of governmental shortsightedness and interference. “During the Cold War, the U.S. government was well aware of the need for rare earths and accumulated large stockpiles. At the end of the Cold War, it decided it was too expensive to maintain the stockpiles, so it began selling them off at prices too low for miners to compete, except in China, which was foresighted enough to buy up local production and develop its mines. “In this light, it is probably worth remembering -- again -- that the majority of the Chinese leadership have engineering backgrounds, versus the lawyers who run the U.S.” The 5: Good point. Regards, Addison Wiggin The 5 Min. Forecast P.S.: Byron King told us on Friday the offshore oil stock he follows in Energy & Scarcity Investor “has now moved out of the realm of a nice ESI story -- and certainly away from being a penny stock speculation -- into another level entirely. It’s now a serious investment-grade company.” That’s fantastic for those who’ve already gone along for the ride. But even now, it can still be had for under $4 a share. In the following presentation, Byron spells out his reasons for believing $4 is still very cheap. View it here. P.P.S.: Thanks, by the way, for the myriad of replies we received on Friday to the question “How’s business where you are?” Here’s a litmus test of the economy across North America: From southwest Washington: “This is a pulp and paper producing area, also lumber. The companies in this area have been hiring workers for the last six months, building new warehouses, and a poly extrusion (for milk cartons) machine is in the works at $100 million cost. Many jobs are seeking qualified people” “I’m GM at a Chicago-based manufacturing company (we make lab instruments/capital equipment) with a diverse global client base among materials manufacturers and OEMs. Strange as it may seem, the past couple of months have been the first time in the past 18 months that I am getting a ‘green’ signal from our three major markets -- Europe, East Asia and Americas -- on near-term order prospects” “I am at a small steel service center in Colorado, and the last two months have been back to normal business. We have been running reduced crews for two years, but are now about to put on a third shift.” So far so good... “I own a business in the service/sales of industrial lasers, serving all across the U.S. and the world. Ninety percent of my customers are suffering, like most people/companies. In the last month or so, inquiries from Southeast Asia and Australia are the only rises I have seen, and no fish on board yet. For the U.S. it appears everyone is waiting to see what will happen next.” Uh-oh... “I’m a boat retailer. Retail prices from $20,000-300,000. Been in business 43 years. Last year was my worst, this year my second worst. Banks are still not lending. Customers are even complaining about their service bills. I don’t see any pickup in business” “I own and operate a small sign shop in south-central Texas. After a mostly horrible 2009, things began to pick up for us in early 2010. Primarily, our oil field clients that we had not had any orders from in almost a year began to place very nice orders. I am still very concerned with what the future holds. I have no plans for adding any employees in the foreseeable future.” Hmmn... doesn’t look like we’re out of the woods just yet. “Being in the collections field, I’m not seeing it yet, but truly things are tough out here. The people I deal with daily are not your subscribers. While they should be, money and jobs are tight” “My business is located in the southeast corner of Michigan and has been for the most part a shell for the past two years! I service certain manufacturing equipment with the entire U.S. as my stomping grounds. Well... it was anyway.” “Recession or not,” writes our last reader for today, with a head scratcher, “one thing people kept on buying (and are still buying) were cell phones and smartphones. I’m a help desk tech in a nationwide wireless retailer and I feel overworked! “If this is a good thing or not, I’m unsure... smartphone contracts aren’t cheap, so I can’t help but wonder if people’s priorities are straight... probably not.”

Top CFTC Official Chilton Blasts Computer-Generated Algorithms Run Amok, Blames Flash Crashes On HFT Robots Posted: 25 Oct 2010 07:42 AM PDT Now even the CFTC is blasting High Frequency Pirates: Bart Chilton, a commissioner with the futures regulator, said "mini-flash crashes occur all too often" following a surge in high-frequency trading. Please someone finally wake up the Rip Van Widiots at the SEC and hold them accountable for not only scapegoating innocent parties, but perpetuating what is essentially a criminal market in which front-running by computers is not only allowed, but encouraged. More from Chilton: "They don't cause as much of a disruption as that of May 6, but more than once this year, runaway algos have disrupted markets. By that I mean, cost people money." So if even the CFTC is all too aware of who is responsible for what has now become a daily stock crashing farce, when will Mary Schapiro and her 9 million pieces of silver finally get the memo? From Reuters: "We should explore ways to hold those who set off runaway robotic trades accountable," he said. At least one algorithm is know to have disrupted the oil markets this year. Infinium Capital Management said in August it was the company at the center of a six-month probe by CME Group Inc into why a new trading program malfunctioned, racking up a million-dollar loss in about a second on February 3. The regulatory agency faces tight deadlines to write regulations to implement the Wall Street reforms that Congress passed in July to increase oversight of the $615 trillion over-the-counter derivatives market. Some measures have earlier deadlines, including speculative position limits in energy and metals markets, which must be finalized in January. Chilton questioned whether there should be position limits for financial futures. "Given our experience with the Flash Crash, however, and the key role one financial futures market appears to have led in the domino decline, I'm wondering if it is appropriate to consider limits in these markets as well," said Chilton. Good luck. JPM will never allow their multi-billion manipulative short bet in commodities, primarily in silver and gold, to ever be impaired, as the bloodbath that would ensue for the firm's P&L will make fraudclosure seem even more pathetic than the SEC's recent wristslap on Agent Orange.

The one-year study - Gold uncorks big year Posted: 25 Oct 2010 07:35 AM PDT It has been another stellar year for gold, which appreciated 31.26% in the 12-month period ended September 30, 2010. Only the Liv-ex 100 Fine Wine Index performed better, albeit nominally so. Nonetheless, let's raise a glass to those two fine investments, gold and wine! No wait! Not the good stuff!

Weekly Market Update Excerpt - Oct. 25, 2010 Posted: 25 Oct 2010 07:31 AM PDT Super Force Signals A Leading Market Timing Service We Take Every Trade Ourselves! Email: [EMAIL="trading@superforcesignals.com"]trading@superforcesignals.com[/EMAIL] [EMAIL="trading@superforce60.com"]trading@superforce60.com[/EMAIL] Gold and Precious Metals Gold and Precious Metals KEY CHART #1: GOLD VIA SGOL-NYSE Buy and Sell recommendations should be added at the recommended price. The Surge Index System Buys Weakness and Sells Strength Super Force Gold Bullion Analysis: [LIST] [*]Gold has a Surge Index 100 Sell Signal as of Oct. 1st. This is the maximum Surge Sell Signal. [/LIST] [LIST] [*]I am a Long Term Bull as it relates to GOLD. I bought more physical bullion when many were predicting much lower prices and better entry levels back in July. I bought and I’m not selling my physical gold. Longer term, I’m convinced Gold and Silver will be much higher. [/LIST] [LIST] [*]Week in Review: I said last week as it relates to Weekly RSI analysis : [/LIST] ...

Gold shines brightest in five and ten-year studies Posted: 25 Oct 2010 07:20 AM PDT The USAGOLD Survey of Investments  Gold shines brightest in five and ten-year studies by Peter A. Grant [B]The one-year study - Gold uncorks big year[/B] It has been another stellar year for gold, which appreciated 31.26% in the 12-month period ended September 30, 2010. Only the Liv-ex 100 Fine Wine Index performed better, albeit nominally so. Nonetheless, let's raise a glass to those two fine investments, gold and wine! No wait! Not the good stuff! Once you've uncorked that heavenly bottle of Lafite Rothschild, the double-digit appreciation is meaningless, and after just four or five glasses your asset is gone completely. And worse yet, if the storage conditions were less than ideal, not only do you lose the return, but you won't even enjoy the wine. The first thing I notice about the one-year chart, unique to recent surveys, is that nearly e...

Gold still an integral part of the current monetary system Posted: 25 Oct 2010 07:04 AM PDT By David Levenstein Monday , 25 Oct 2010 (Mineweb) — Every single day as the values of currencies, bonds, equities, commodities and gold fluctuate, investors try to determine which sector is going to yield the best returns over the next 3- 5 years. While past performance is no guarantee of future performance, gold has been one of the best performing assets over the last decade, and if one considers the fundamentals driving the gold price, it is reasonable to assume that this trend is going to continue in the foreseeable future. … Since the US dollar peaked in 2001, the relative values of global currencies especially the US dollar have been the main driving force behind the higher gold prices. … Each country has its own currency to facilitate its business and trade. The value of one currency as compared to another depends on the economic health of the nations involved as well as the perception of stability and confidence in the political climate in those currencies. As conditions change, currency values also change to reflect the new situation. Changes in these currency valuations have a significant impact on governments, corporations, financial institutions as well as individuals. The forex market probably has a more pervasive influence on worldwide economic conditions than any other market. And, gold acts as a barometer for these changes. It is an alternative currency one can hold instead of holding "paper money," or "fiat money," as it is commonly referred to. While gold's value is influenced by the value of the other currencies, it still has an intrinsic value and will never be worth nothing which could happen to any one of these fiat currencies. … Recently, U.S. Treasury Secretary Timothy Geithner said, "It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive," Geithner added. "It is not a viable, feasible strategy and we will not engage in it." I think it is very important for Geithner to understand that as the Fed continues to debase the US dollar with its program of quantative easing, the dollar will weaken and not strengthen. … no matter what your local politician tells you, the world is in a shambles. Most industrialized countries have slow GDP growth, high unemployment, huge sovereign debt as well as major budget deficits and interest rates at practically zero. Furthermore, around the world we are seeing rising commodity prices and major currency fluctuations. All this is going to lead to further currency debasement, and possibly both collective and unilateral government intervention in the forex market. We are seeing capital controls already being imposed in various countries and there is a looming threat of a major trade war. The once almost perfect monetary system is now falling apart. [source] RS View: Rather, the structural rot of the poorly designed old architecture has reached the breaking point and the various tenants are packing up and moving across the street where a golden foundation offers the qualities needed as the basis for stable and reliable economic structures and progress into the future.

Hourly Action In Gold From Trader Dan Posted: 25 Oct 2010 06:00 AM PDT View the original post at jsmineset.com... October 25, 2010 09:54 AM Dear CIGAs, News emerging out of the weekend's G20 meeting resulted in additional Dollar selling and wholesale buying of the Japanese Yen further evidencing the fact that the Bank of Japan is finished as a market moving force in the foreign exchange markets as it has given up on attempting to derail the Yen. The unvarnished truth is that the BOJ has met its match in the Bernanke-led Fed which can "Out QE" it with one hand tied behind its back. "Resistance is Futile" said the Borg to humanity but it might as well be said by the Borg leader Bernanke to the rest of the Central Banks of the world. Strength in the Yen and the Aussie is working to keep pressure on the US Dollar, even as the Euro surrendered a rather large portion of its overnight gains as the New York session wore on. It fell below the critical level of 77 but managed to recover and get back over it thanks to the slide in the Euro. The result was that g...

In The News Today Posted: 25 Oct 2010 06:00 AM PDT View the original post at jsmineset.com... October 25, 2010 09:52 AM \ Thought For This Morning: If a G20 meeting is a total bomb, all you have to do is blast over the airwaves that it was a great success. Joseph Goebbels would be proud. Today’s gold market is about whether or not Bernanke will continue with QE. Europe is opting for austerity by recognizing that no present politician will be re-elected. They wish Bernanke to do the same. There is no economic epiphany there.   Jim Sinclair's Commentary Here is a report from Seeking Alpha, the FT blog, on the G20 meeting that comes somewhat closer to the truth of what happened, which is nothing much. It has holes such as how does the reduction of the IMF vote within the G20 make the IMF anything but closer to redundancy. The barrage of MOPE today has never been witnessed ever before in my more than 50 years of market experience. G-20 Presses On With Plan to Cool Currency Battles BY BOB DAVIS IN WASHINGTON AND...

USDA: Food inflation to accelerate into 2011 Posted: 25 Oct 2010 05:45 AM PDT By Matt Andrejczak Oct. 25, 2010 (MarketWatch) — Food inflation will "accelerate" during the final months of 2010 and into the first six months of 2011, especially for meat, cereal and dairy products, the U.S. Agriculture Department said Monday. U.S. food companies have already started to raise prices to blunt price spikes for a number of commodities, including corn, wheat and coffee. "Although inflation has been relatively weak for most of 2009 and 2010, higher food commodity and energy prices are now exerting pressure on wholesale and retail food prices," USDA food economist Ephraim Leibtag said. … When commodity prices rise for a prolonged period, it normally takes several months before those price gains find their way into the supermarket. Inflation comes at a tricky time for brand-name U.S. food makers, most of whom have been reluctant to pass along higher commodity costs. They are still coping with tight-fisted shoppers and rising food stamp usage… [source] RS View: With the Fed's next round of qualitative easing just around the corner, I wonder how long it will be before the rest of the world takes a solemn at the poor state of our economy and our federal budget. Upon doing so they will conclude that our dollar is just another glorified sort of social program — a sort of national 'everything stamp' akin to food stamps… Surely nobody expects it to remain a reserve asset for very much longer.

Cariboo Rose TSX.V – CRB Posted: 25 Oct 2010 05:39 AM PDT Richard (Rick) Mills Ahead of the Herd As a general rule, the most successful man in life is the man who has the best information The Quesnel Trough, arcing through much of central British Columbia, Canada encompasses most of the mines currently operating in the province as well as most of the projects currently in the prefeasibility and feasibility stages of development. The Quesnel Trough attracts the lions share of exploration spending which is focused primarily on copper/gold porphyry style deposits. Porphyry copper deposits yield about two-thirds of the world’s copper and are therefore the world’s most important type of copper deposit. In Canada, British Columbia enjoys the lion’s share of this type of deposit, and they contain the largest resources of copper, significant molybdenum and 50% of the gold in the province. Because of… [LIST] [*]Strong metal prices [*]Substanial size [*]Improved economics of these porphyry coppe...

LGMR: Gold & Silver Rally Hard After G20 Fails to Name Cause of Dollar Weakness Posted: 25 Oct 2010 05:37 AM PDT London Gold Market Report from Adrian Ash BullionVault 08:45 ET, Mon 25 Oct. Gold & Silver Rally Hard as "Buyers Pour In" After G20 Fails to Name Cause of US Dollar's Weakness THE PRICE OF PHYSICALgold bullion rallied 1.2% against the Dollar and 0.8% against the Euro in Asian and early London trade on Monday, rising as "buying poured into the market" after the weekend's inconclusive G20 summit, according to one Hong Kong dealer. "It was practically a one-way street. Every pullback was minimal and attracted more buying." "Finance leaders at the weekend's G-20 meeting [in Seoul] stated their commitment to limiting currency intervention," notes Standard Bank here in London today, "but failed to announce any concrete actions/policies regarding currency devaluation." "[So] the Dollar has weakened significantly against most major currencies...and commodity prices are mirroring movements in the Dollar market." Crude oil pushed almost 1% higher in Asian trade today, whi...

Jim's Mailbox Posted: 25 Oct 2010 05:21 AM PDT Jim and Monty, I think you might find the following article interesting… Best wishes, Dan India Billionaires Go On Buying Spree in `Last Frontier' Africa By Mehul Srivastava and Subramaniam Sharma – Oct 24, 2010 8:18 PM PT Indian billionaire Ravi Ruia flew to Africa every month for the past 18 months, buying coal mines in Mozambique, half an oil refinery in Kenya and a call center in South Africa for his Essar Group. This month, executives of his Essar Energy Plc. attended a conference hosted by Nigerian President Goodluck Jonathan to attract investors in the power grid. The officials, backed by $2 billion the company raised in an April listing on the London Stock Exchange, also mulled other "business opportunities" around Africa, the company said. Ruia, who controls the $15 billion Essar Group with his older brother, Shashi, is not alone. Billionaire countrymen Sunil Mittal, chairman of India's largest mobile phone provider, Bharti Airtel Ltd.; Adi Godrej, chairman of Godrej Consumer Products Ltd.; and Harsh Mariwala, founder of Marico Ltd., have fueled a $15.8 billion buying spree in Africa since January 2005. "Africa looks remarkably similar to what India was 15 years ago," said Firdhose Coovadia, director of Essar's African operations. "We can't lose this opportunity to replicate the low-cost, high-volume model we've perfected in India." 'Last Frontier' Indian companies acquired or invested in at least 79 companies in Africa, chasing business in less crowded markets after growing in a home economy that expanded by an average 8.5 percent since April 2005. More…   There's Fear Behind the Curtain CIGA Eric The blitz today of MOPE is beyond anything I have ever seen. Somebody is scared to death of something. Jim I agree with you Jim. The MOPE blitz is impressive. There are signs growing "economic roll-over" (see chart below) in more than a few series I follow. The solution is certain to be more quantitative easing (devaluation) at a time when global tensions continue to intensify as a result of it (see article below). I think that something is a sequences of events, both economic and social, beginning to unfold across the globe. Eric Chicago Fed National Activity Index (CNFAI) and S&P 500 Average: Headline: China Said to Widen Its Embargo of Minerals China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted some shipments of those materials to the United States and Europe, three industry officials said this week. The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further intensify already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese leaders are willing to use their growing economic muscle. Source: nytimes.com Source: chicagofed.org More… Lead, Follow, Or Get Out Of The Way CIGA Eric Thanks Eric, Here are my questions, I'd also like to make a donation to your blog, please let me know who to make the check out to and the address to send, thanks in advance. 1. I've been following G & S for a couple years now. One if my sources of info is GATA & Lemetropole Cafe, run by the well known Bill Murphy(http://www.lemetropolecafe.com/). It is known that the bullion banks use paper to short the metals and therefore keep the prices suppressed. In an environment where "gold is the enemy", how effective can techinical analysis really be? A good example would be the recent break out, both the metals looked very strong, and were climbing nicely, then all of a sudden we experience another 'takedown' and we wipe of 60 bucks in three days? What are your general thoughts regarding this manipulation, and how effective techincal analysis can be in such an environment. 2. Jim S. has been a wonderful resource for us all. While he does not like to time the market, he has long held the 1650 figure for gold by end of this year, then referring to Armstrong's numbers for the next leg up. With what has happened this last week, and many calling for a correction in gold because of the healthy runup, do you think Jim's number can actually be reached by end of year? 3. In your articles, you oftern talk of connected money positioning itself for the long side. Can you tell me how long you think this positioning will take? In other words, I'm trying to find out when will the 'connected money actually want to stop suppressing the price and let it rise? 4. Lastly, where do I look to find the footprints of connected money? Any resources would be appreciated. Thanks again Eric, look forward to hearing your thoughts Amir My Responses 1. No market or trend – stocks, bonds, currencies, gold, silver, etc can be manipulated long against the secular trend. History is very clear on the subject of control and manipulation. When the message of the market is ignored or misunderstood it gives rise to the common presumption that a misbehaving market must be manipulated. This is not to suggest that key markets, such as gold, are not controlled. At times the control, such as $20/oz or $35/oz fix, is official. Other times, the control is more subtle. Nevertheless, all control that contradicts or fights the secular trend will be smashed by market forces. 2. Jim's forecast shows an exceptional understanding of the price cycle. In my opinion, Jim's point forecast is immaterial for most long-term gold holders. $1650 will be breached, but the focus should not be on time but rather the economic and financial implication of trend acceleration in 2010-2012. 3. Connected money does what they do (right or wrong). Market forces, however, are relentless. As Lee Iacocca often said in the old Chrysler Ads – "Lead, Follow or Get Out of the Way." In gold terms, either Lead – open embrace the secular trends, Follow – quietly embrace the secular trends with money, or get the hell out of the way. The latter tends to force the issue in capital markets. 4. Footprints of connected money. As I have said many times before. Follow the money. Leveraged markets control price. Following this logic, Follow the money in leverage markets. Regards, Eric More…

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