Gold World News Flash |
- Repeated, fraudulent efforts at and deviously controlling silver prices – What next?
- Timberline Intercepts Bonanza Gold Grades: 7.88 ounces per ton (269.9 g/t) and 15.24 opt (521.9 g/t)
- America’s Long Wave Versus the Global Long Wave
- Unemployment Figures Confirm the Precious Metals Bull
- International Forecaster October 2010 (#9) - Gold, Silver, Economy + More
- Funny Money and the Banks that Make Us Laugh
- Revelations
- Monthly Gold Charts From Trader Dan
- Comex manipulation critics are needlessly failing to make their case
- Marc Faber: Fed's QE2 Could Trigger Market Correction
- Jim's Mailbox
- TV Pricing Bloodbath Threatens Already Razor-Thin Retailer Margins, Will Send Japanese FX Interventions Into Overdrive
- Guest Post: Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral
- Gold Never Has Been (and Never Will Be) in a Bubble
- Will QE2 Impact Equity Market Fundamentals: Consensus And Fringe Views
- Fraud Caused the 1930s Depression and the Current Financial Crisis
- Gold and silver are money again, Eric Sprott tells King World News
- A perfect example of how a gold standard would retard banking fraud
- Bond and Phillips note GATA, Butler in commentary on silver litigation
- All Eyes On the Fed: Awaiting Bernanke’s Decision
- Haynes, Norcini, Arensberg wrap up precious metals' week at King World News
- Haynes, Norcini, Arensberg wrap up precious metals' week at King World News
- Fund Manager: Gold $10,000 An Ounce
- Hathaway: Gold Will Outlive the Dollar Once Slaughter Comes
- KWN Weekly Metals Wrap – Commercial Signal Failure?
- Gold and 12 Zeroes, Part I
- IMF's gold sales rose sharply in September
- IMF's gold sales rose sharply in September
- The Fed Underwrites Asset Explosion
- Barrick Gold CEO Discusses Q3 2010 Results - Earnings Call Transcript
| Repeated, fraudulent efforts at and deviously controlling silver prices – What next? Posted: 31 Oct 2010 01:00 PM PDT Since we received reports from the CFTC that market players have made "repeated" and "fraudulent efforts to persuade and deviously control" silver prices, we have heard that HSBC Holdings Plc and JPMorgan Chase & Co. are facing an investor's lawsuit of placing "spoof" trading orders to manipulate silver futures and options prices in violation of U.S. antitrust law.
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| Timberline Intercepts Bonanza Gold Grades: 7.88 ounces per ton (269.9 g/t) and 15.24 opt (521.9 g/t) Posted: 31 Oct 2010 12:00 PM PDT Drill hole BHDDH10-07 returned a significant intercept of 43.2 feet averaging 0.82 ounces per ton (opt) (13.2 metres at 28.1 grams per tonne (g/t)) gold including 2.2 feet grading 15.24 opt (0.7 metres of 521.9 g/t) gold. This hole indicates a bonanza grade zone within the current mineralized area and could represent some of the initial production, which is expected to commence in Q3/Q4 2011.
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| America’s Long Wave Versus the Global Long Wave Posted: 31 Oct 2010 05:04 AM PDT The stock market has always been a dynamic affair but until the turn of the century 10 years ago, there were always a few tried-and-true relationships you could always count on. For instance, in the 20th century it was almost always true that if the broad market as reflected by the Dow or the S&P was rallying and the gold and oil stocks were also rallying, the rise in the broad market was viewed as suspect and in most cases would soon reverse. It was said that "What's good for gold/oil is bad for stocks." Then along came the bull market of 2003-2007, which completely blew that relationship out of the water
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| Unemployment Figures Confirm the Precious Metals Bull Posted: 31 Oct 2010 05:00 AM PDT Gold and silver forge on to new highs and all is looking well for the next up leg in this multi-year bull market. Yet all was not looking so sure some months back when the crash of the credit crunch was still echoing in people's ears, talk of a double dip recession was rife and the tower of bail-out debt threatened to tumble down on many a government.
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| International Forecaster October 2010 (#9) - Gold, Silver, Economy + More Posted: 31 Oct 2010 04:00 AM PDT The recognition of currency war, which has been going on for years, reflects the failure of international cooperation and the failure the G-20 to find a solution of the beggar-thy-neighbor policies of almost every nation. The result has been growing geopolitical dislocation, which G-20 has yet to find a solution for.
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| Funny Money and the Banks that Make Us Laugh Posted: 30 Oct 2010 07:00 PM PDT In my long life, I have learned many things. Important things. One Important Mogambo Lesson (IML) is that "responsibility is a cruel taskmaster," and that one should accept as little responsibility as possible, especially if it concerns taking responsibility for a wife and family, who not only seem to exist for the sole purpose of bankrupting me and driving me absolutely insane with their silly Earthling antics, but are also so stupid that they cannot be made to understand the Vital Freaking Importance (VFI) of investing every dime into gold, silver and oil when the Federal Reserve is creating so much money that it causes inflation in prices to rise above zero.
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| Posted: 30 Oct 2010 06:00 PM PDT What a fantastic week for those in the camp who've known that all was not as it seemed in the Silver market. I delve a bit more into it later, but there are a few widely quoted "personalities" who have so much egg on their face now that it will take weeks or months to get every last crack clean.
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| Monthly Gold Charts From Trader Dan Posted: 30 Oct 2010 12:04 PM PDT Dear CIGAs, Click either chart to open this months action in Gold in PDF format with commentary from Trader Dan Norcini
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| Comex manipulation critics are needlessly failing to make their case Posted: 30 Oct 2010 09:51 AM PDT The premise that you cannot prove price manipulation – as indicated in this video – is false. The question you have to ask yourself is, what came first the price or the price discovery? Normally, prices are the result of a multitude of buyers and sellers transacting simultaneously – not knowing in advance exactly how their orders will effect the market (Smith's famous 'invisible hand'). Price manipulation on the other hand, and in the context of what we see on the Comex and other exchanges, is occurring when one market participant decides exactly what price they want a security to trade at before placing their orders – and then flooding the system with as many orders (both real and fake) necessary to achieve that price – taking advantage – as is the case with JP Morgan for example – of extralegal computer trading programs, unlimited credit, and virtually zero interest expense and transaction costs. Until the Comex critics properly frame this debate, prices will remain artificially depressed – - – until the gold vigilantes like Sprott and Embry simply say 'enough is enough' and fight fire with fire by leveraging their own substantial capital reserves to overwhelm the system in favor of hard money and justice.
This posting includes an audio/video/photo media file: Download Now |
| Marc Faber: Fed's QE2 Could Trigger Market Correction Posted: 30 Oct 2010 07:10 AM PDT
By Dian L. Chu, Economic Forecasts & Opinions
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| Posted: 30 Oct 2010 06:32 AM PDT Unusual Pattern of Buying Rather Than Selling Strength in Silver The unusual pattern of buying rather than selling strength by 'connected' money in the silver market illustrates a subtle yet distinct change in money flows not see since the price spike of 2005-2006. The massive spike in spreading activity suggests that connected money is unlikely to be the bag holders during a price spike. Silver London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:
COT Money Flow Upper Table:
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| Posted: 30 Oct 2010 06:16 AM PDT
So much for the 3D TV craze... and for overestimating the indiscriminate purchasing power of the US consumer. After much fanfare, and visions for record sales, TV makers such as Sony, Samsung and LG have gotten reacquainted with gravity, and are now gearing up for a "miserable" Christmas as an all out price war confirms the US consumer, even if not paying mortgage bills, refuses to purchase indiscriminately. The result: price drops of over 25% for the upcoming holiday season, huge margin cuts for already margin lite retailers (read Amazon), and an increasing reliance on corporate sales to pick up for the sudden and dramatic consumer slack. But the biggest hit will be to Japanese and Korean exporters, who will soon need to add to a dramatic decline in end demand, such factors as a ramp in Rare Earth Minerals: a key component to flat screen TV production, and, of course, record expensive currencies. All in all, it is shaping up for a miserable existence for the Japanese export economy, and we are very confident that a tsunami of export-led anger is about to be unleashed on Kan's government, demanding to at least moderate the one variable that is under Japanese control: the FX rate. Which means that many more USDJPY interventions are coming as soon as next week, when the Fed's QE2 announcement is sure to send the FX pair far below 80. In other words, QE2, in addition to confirming that the Fed cares little about the dollar's purchasing power, is about to set the FX, and trade wars, into overdrive. Bloomberg describes the upcoming carnage in TV sales:
This is very bad news for Amazon, whose already razor thin margins are about to go negative as it strives to keep in the price war to the bottom with other retailers:
The imminent Japanese response: far more FX intervention. It cost japan $20 billion or so to get the USDJPY back to 85 for about 2 weeks. We expect about $100 billion to be spent over the next 3 months to obtain the same impact. This is money which, when sterilized, will not end up going into US Treasurys, and will force the Fed to bid up even more of the lost UST demand by Japan (and soon, others).
And lastly, the massive inventory restocking that was enough to boost Q3 preliminary GDP by well over 1%, is about to actually start taking a toll on GDP as the number slides coupled with accelerated inventory liquidations:
The following summary of why John Taylor is right and a sell off in November is likely immiment is absolutely spot on:
And Yamada did not even think about the rampant inflation in products in which commodity input costs can not be offset. Altogether, for everyone except the richest 1% of America, this holiday season will likely be ugly, even as the economy contracts, and the global economic system retrenches in anticipation of all out trade war. Good luck QE2.
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| Guest Post: Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral Posted: 30 Oct 2010 05:34 AM PDT
Submitted by Charles Hugh Smith from Of Two Minds Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral Democracy's Death Spiral is a positive feedback loop between ever-greater concentrations of wealth and the ever-higher costs of retaining political power.
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| Gold Never Has Been (and Never Will Be) in a Bubble Posted: 30 Oct 2010 05:00 AM PDT Most serious gold investors follow a basic principle: that gold is stable in value. Changes in the "gold price" represent changes in the currency being compared to gold, while gold itself is essentially inert. This is why gold was used as a monetary foundation for literally thousands of years. You want money to be stable in value. The simplest way to accomplish this was to link it to gold. Today, we summarize this quality by saying that "gold is money." From this we can see immediately, that if gold doesn't change in value – at least not very much – then it can never be in a "bubble." There may be a time when many people are desperate to trade their paper money for gold, but that is because their paper money is collapsing in value. It has nothing to do with gold. Let's take a look at some of the great gold bull markets of the last hundred years:
Each of these situations was an episode of paper currency depreciation. Today is no different. The rising dollar/euro/yen gold price is simply a reflection of the Keynesian "easy money" policies popular around the world today. We can also see that, if gold remains stable in value, then the supply/demand considerations that affect industrial commodities do not affect gold, which is a monetary commodity. This is why gold is used as money. If its value was affected by industrial supply/demand factors, we would not be able to use it as money. Thus, "jewelry demand" or "peak gold," or any other such factor, has little meaningful effect on gold's value. Day-to-day money flows will affect the price at which currencies trade vs. gold, but this ultimately affects the currency in question, not gold. None of these historical "gold bull markets" resulted from jewelry demand or mining supply. Any attempt to attach a valuation to gold is mostly a waste of time. Concepts like the "inflation-adjusted gold price" or the "gold/oil ratio," or a ratio of outstanding debt or currency to a quantity of gold bullion, are a distraction. An item that doesn't change value is never cheap or dear. That's what "gold is money" means. The "price of gold" may reach five thousand, ten thousand, a hundred thousand, a million, or a billion dollars per ounce. The gold bubble-callers will be frothing at the mouth, until they finally have the realization that there was never a bubble in gold, but only a crash in paper money. Gold is money. Always has been. Probably always will be. This time it's different? I don't think so. Regards, Nathan Lewis Gold Never Has Been (and Never Will Be) in a Bubble originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Will QE2 Impact Equity Market Fundamentals: Consensus And Fringe Views Posted: 30 Oct 2010 04:48 AM PDT
In his weekly "kickstart" piece, Goldman's David Kostin shares a glimpse of how portfolio strategists view the impact of QE2 on UW equity market fundamentals. In a nutshell, per Goldman bulls cite 20% upside to Fed model and a lower equity risk premium. Goldman is far less optimistic: "We believe QE2 is unlikely to change our sales or margin forecasts, so return prospects become a valuation debate. Our targets imply less upside, given 13.5x P/E is consistent with prior 1-2% real rate regimes." Furthermore, Goldman's economic team has already priced in $1 trillion of QE2 in its 2011 GDP forecast of 1.8% (below consensus of 2.5%), meaning at worst the overall economy will continue to operate at negative growth rates, once Q3 GDP is revised lower and Q4 GDP found to be negative following the inventory crunch. As Kostin puts it: "The US has a demand, not a supply, problem." Alas, the Fed is completely unable to grasp this. And the more it tinkers with the market, and the more fundamentals are disconnected from reality, the less Americans will trust the economic situation and retrench even more, leading to an even more pronounced demand "problem." As for markets, AJ Cohen's successor hits it right on the head: "We believe the forward path of stocks will be determined by potential asset allocation shifts by owners of 70% of the US equity market. Individuals own in aggregate 53% and pension funds own 17%. Shares will trade sustainably higher if these investor groups decide to re-risk from bonds to stocks. Any shifts most likely will be gradual." In other words, unless investors regain their faith and confidence in stocks, the market will merely trade on Fed liquidity and not on anything resembling fundamentals... or reality. More insights from Kostin: The consensus view is the Fed will announce next Wednesday, Nov 3rd that it intends to start buying US Treasury securities. Clients have coalesced around the belief the initial announcement will be $500 billion in size, with an indication of willingness to purchase up to $1 trillion. Another possibility is the Fed might announce an initial purchase of $100 billion of securities and a commitment to buy a similar amount per month for an extended, but undefined, time period. The bullish argument for equities goes as follows: (1) The Fed buys longdated Treasuries to reduce term premium and lower interest rates across the maturity spectrum; (2) The low yields penalize individuals and corporations who hold cash; (3) individuals and institutional investors re-allocate their savings into higher risk instruments such as equities, high yield bonds, emerging market debt and equity, and commodities; (4) firms pursue new capital spending initiatives and boost employment; (5) asset price inflation has a wealth effect and spurs retail spending; (6) a consequence of lower US interest rates is a weaker US Dollar which benefits US exporters and also stimulates some incremental domestic job growth. Our year-end 2010 price target for the S&P 500 remains 1200 or 1% above the current level of 1183. We expect the S&P 500 will trade sideways during 1Q before rising during the subsequent six months. Our 12-month forecast of 1275 reflects a price return of 8% and a total return including dividends of 10%. For details, see our report US Equity Views: Updating our price targets as investors focus on 2011 (October 15, 2010). We expect the level of the S&P 500 will track the path of EPS growth. We forecast 10% EPS growth between 2010 and 2011. Bottom-up consensus EPS growth equals 14%. Our DDM-based 12-month price target of 1275 implicitly assumes the current NTM P/E multiple remains unchanged at 13.5X. Note that the current multiple equals the average P/E multiple of the S&P 500 during prior periods when real interest rates ranged between 1% and 2% which matches our forecast interest rate environment for 2011. Three topics drive our view of the trajectory of the US equity market. (1) Sales; (2) profit margins; and (3) money flow. Below we briefly outline how each of these items will be affected by the pending QE2. 1. QE2 is unlikely to change our sales forecasts. Goldman Sachs Economics 2011 US GDP growth forecast already incorporates at least $1 trillion of Treasury purchases by the Fed. Despite the hefty forecast of Fed purchases, our 1.8% GDP growth forecast remains below the consensus expectation of 2.5%. The buy-side seems to be in the 2.0%-2 ¼% range. Our current index and sector-level sales forecasts incorporate our GDP growth assumptions and therefore already capture QE2. Capacity utilization hovers at 74%, up from the March 2009 low of 68% but below the 81% long-term average, so firms are not compelled to fast-track new projects despite the availability of cheap financing. The US has a demand, not a supply, problem. The US Dollar has weakened in the 12 weeks since QE2 entered public debate and it will benefit revenues of US companies, although by less than many investors believe. S&P 500 generates just 30% of sales outside the US. 2. QE2 is unlikely to change our margin forecasts. Our index and sector level net margin estimates incorporate our US and world GDP, interest rate, inflation, oil and US Dollar forecasts and the firm’s macroeconomic view assumes $1 trillion of QE2. If the Fed successfully spurs higher inflation than we currently assume (1.1% in 2011), it will have a negative impact on profit margins because rising input costs will not be fully-passed through to the consumer. Passing inflation along to the end customer will be particularly difficult in an environment with nearly 10% unemployment. Our 8.4% net margin forecast stands below bottom-up consensus of 9.0%. The Fed’s desire to re-inflate the economy tilts margin risk lower rather than higher. Firms reporting negative margin surprises in 3Q span the value chain from raw (X, AKS, NUE, MEE) to intermediate (GENZ, LLTC, BMS) to end-demand (AN, AVP, KMB, SLB, EFX, AVY, T) to cite just a few examples. 3. Therefore, QE2’s potential impact on the US equity market reduces to a debate over valuation. Bulls argue stocks are dramatically undervalued relative to bonds. It is true that using Treasuries, BBB corporate bonds, or TIPs in the Fed model leads to a conclusion the S&P 500 is 20% undervalued. Bulls similarly argue that QE2 will drive both yields and risk lower, reduce the cost of equity, and support a DDM valuation above our 12-month target. Bulls implicitly argue stocks should trade at a higher P/E multiple. Our more modest return projection incorporates a current starting point valuation that shows stocks trade at a 13.5x NTM P/E multiple consistent with past real interest rate regimes of 1-2%. However, the current P/E multiple is calculated when margins stand at all-time highs. A P/E assuming normalized margins would be 14.6x closer to the long-term average. We believe the forward path of stocks will be determined by potential asset allocation shifts by owners of 70% of the US equity market. Individuals own in aggregate 53% and pension funds own 17%. Shares will trade sustainably higher if these investor groups decide to re-risk from bonds to stocks. Any shifts most likely will be gradual.
And here are the key charts from Kostin:
A look at sales, earnings, and most importantly, margins:
Valuation:
And Correlation and Risk:
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| Fraud Caused the 1930s Depression and the Current Financial Crisis Posted: 30 Oct 2010 04:39 AM PDT
Robert Shiller - one of the top housing experts in the United States - says that the mortgage fraud is a lot like the fraud which occurred during the Great Depression. As Fortune notes:
The former chief accountant of the S.E.C., Lynn Turner, told the New York Times that fraud helped cause the Great Depression:
Economist Robert Kuttner writes:
Similarly, Tom Borgers refers to:
Professor William K. Black writes:
Moreover, the Glass Steagall Act was passed because of the fraudulent use of normal bank deposits for speculative invesments. As the Congressional Research Service notes:
Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith's, definitive study of the Great Depression, The Great Crash, 1929 :
As the Great Crash, 1929 documents, there were many fraudulent schemes which occurred in the 1920s and which helped cause the Great Depression. Here's one example of a pyramid scheme in Florida real estate:
As DoctorHousingBubble notes:
James Galbraith recently said that "at the root of the crisis we find the largest financial swindle in world history", where "counterfeit" mortgages were "laundered" by the banks. As he has repeatedly noted, the economy will not recover until the perpetrators of the frauds which caused our current economic crisis are held accountable, so that trust can be restored. See this, this and this. No wonder James Galbraith has said economists should move into the background, and "criminologists to the forefront." Note 1: I asked Professor Black to comment on this essay, and he said the following:
Note 2: The Austrian economists point out that it is bubbles which cause crashes. I agree. But as Professor Black points out, fraud is one of the main things which causes bubbles. Note 3: Of course other factors, such as excess leverage and counterproductive actions by the Federal Reserve, also contributed to the 1930s Depression and the current crisis.
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| Gold and silver are money again, Eric Sprott tells King World News Posted: 30 Oct 2010 04:36 AM PDT 11:25a CT Saturday, October 30, 2010 Dear Friend of GATA and Gold (and Silver): Sprott Asset Management CEO Eric Sprott praised GATA's work in his address to the New Orleans Investment conference yesterday and today is interviewed by Eric King at King World News, where he discusses the prospects for gold and silver and their mining shares as well as the increasing remonetization of gold and silver. The interview is about 14 minutes long and you can find it at King World News here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/30_... Or try this abbreviated link: CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Goes Into Production 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 Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| A perfect example of how a gold standard would retard banking fraud Posted: 30 Oct 2010 04:23 AM PDT MK: With gold, accurate accounting is possible and those wishing not to get ripped off have a voice. Without gold, accurate accounting is impossible and those wishing not to get ripped off are left arguing the relative merits of economic dictatorships (austerity) versus ponzi schemes (stimulus).
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| Bond and Phillips note GATA, Butler in commentary on silver litigation Posted: 30 Oct 2010 04:08 AM PDT 11a CT Saturday, October 30, 2010 Dear Friend of GATA and Gold (and Silver): Citing the work of GATA and silver market analyst Ted Butler, David Bond of Silverminers.com and Julian Phillips of the Gold Forecaster have taken note of the prospect of CFTC enforcement and federal lawsuits against investment banks Morgan Chase and HSBC over manipulation of the silver market. Bond's commentary is headlined "Could This Be It?" and you can find it at GoldSeek's companion site, SilverSeek, here: http://news.silverseek.com/SilverSeek/1288382638.php Phillips' commentary is headlined "Repeated, Fraudulent Efforts at Deviously Controlling Silver Prices -- What Next?" and you can find it at SilverSeek here: http://news.silverseek.com/SilverSeek/1288400400.php CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Goes Into Production 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 * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| All Eyes On the Fed: Awaiting Bernanke’s Decision Posted: 30 Oct 2010 04:00 AM PDT The world waits… Stocks barely budged this week. Gold bobbed around like an anchorless sailboat, adrift in a vast ocean of guesses, speculation and rumor. All eyes, meanwhile, are on US Fed Chairman Ben Bernanke, who is widely expected to announce his next round of systematic dollar debasement a few days from now – a strategy otherwise known as "quantitative easing," or "QE" for short. Trepid investors, unsure of what the value of the world's reserve currency will be a week from now, sit on the sidelines, awaiting their cue from the man with the magic chopper. Fellow Reckoners will recall Bernanke's statement that, should it become "necessary," he could cure what ails the financial world by dropping money from helicopters. He's not quite there yet. Readers are invited to have a little patience… Of course, the battle between central bank-created fiat money and its arch nemesis, gold, is not a new tale. Money meddlers have been tussling with the precious metal since the coin clipping days of the Romans. You'd think the bozos would have learned their lesson by now. But, as Bill likes to say, what one generation learns, the next is quick to forget. "Gold vs. the Fed: the Record is Clear," reads a headline from The Wall Street Journal this week. The article goes on to highlight a few of the dollar's lowlights during its ongoing battle with the Midas Metal. "From 1947 through 1967, the year before the US began to weasel out of its commitment to dollar-gold convertibility," the story begins, "unemployment averaged only 4.7% and never rose above 7%. Real growth averaged 4% a year. Low unemployment and high growth coincided with low inflation. During the 21 years ending in 1967, consumer-price inflation averaged just 1.9% a year. Interest rates, too, were low and stable – the yield on triple-A corporate bonds averaged less than 4% and never rose above 6%. "What's happened since 1971," the article wonders aloud, "when President Nixon formally broke the link between the dollar and gold? Higher average unemployment, slower growth, greater instability and a decline in the economy's resilience." And that's not all. "For the period 1971 through 2009, unemployment averaged 6.2%, a full 1.5 percentage points above the 1947-67 average, and real growth rates averaged less than 3%. We have since experienced the three worst recessions since the end of World War II, with the unemployment rate averaging 8.5% in 1975, 9.7% in 1982, and above 9.5% for the past 14 months. During these 39 years in which the Fed was free to manipulate the value of the dollar, the consumer-price index rose, on average, 4.4% a year. That means that a dollar today buys only about one-sixth of the consumer goods it purchased in 1971." And to think the Journal is referring only to official statistics! The real story, when adjusting for the number torture going on in the government's chamber of statistics – what Orwell might call the Ministry for Truth – is far, far worse. But readers get the point. The evidence is in. The facts have been observed. The arguments made. The case against a fiat money system would seem as open and shut as they come. So why continue down the path leading to the very same cliff every other fiat money leapt from? Ahh… As every liar worth his salt well knows, a mistruth must beget a fraud, which, in turn, must give rise to another lie. The world is brimming with stories of people who blindly cling to crackpot ideas in the face of any and all rational argument to the contrary. In fact, research shows that, far from inspiring a level-headed change of opinion, a well constructed argument dismantling this or that hocus pocus theory often has the opposite effect, emboldening the purveyors of such falsehoods. Leon Festinger introduced the theory, known as "cognitive dissonance" in his well-known book When Prophecy Fails, co-written with Henry Riecken, and Stanley Schachter. In it, Festinger and his colleagues infiltrate a cult whose leader, Dorothy Martin, convinces a bunch of fellow village idiots that an apocalyptic flood is going to ravage the earth and that their only hope rests with a group of strangely benevolent aliens who would swoop down at the hour of reckoning to save the believing souls form certain death. One might reasonably expect that, when the fated day came and went without a drop of rain (or alien appearance), the group, no doubt embarrassed but otherwise none the worse for wear, would simply disband and go home. Not so. Ed Yong, an award-winning British science writer who addressed the subject in a recent article for Discover magazine, describes what happened next. "In a reversal of their earlier distaste for publicity, [the group] started to actively proselytize for their beliefs. Far from shattering their faith, the absent UFOs had turned them into zealous evangelists." What corners we humans allow our theories to paint us into! Perhaps it is the same psychological disposition, a cerebral partitioning of sorts, giving rise to the popular belief that a man can grow prosperous by spending more than he earns. Or that problems caused by too much debt can be cured…with more debt. Or that leaving a central banker in charge of the value of money can end in anything other than currency destruction and eventual financial ruin. So, what does a central banker do when one round of money printing doesn't bring about the desired effect? Does he revisit first principles and reexamine the evidence? Or does he double down on his bets, defending his actions with increasingly zealous evangelism? Bernanke gives the world his answer on Wednesday. Joel Bowman All Eyes On the Fed: Awaiting Bernanke's Decision originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Haynes, Norcini, Arensberg wrap up precious metals' week at King World News Posted: 30 Oct 2010 03:42 AM PDT 10:40a CT Saturday, October 30, 2010 Dear Friend of GATA and Gold (and Silver): The weekly precious metals wrapup commentary at King World News features Bill Haynes of CMI Gold & Silver in Phoenix, Dan Norcini of JSMineSet.com, and the Got Gold Report's Gene Arensberg. You can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/30_... Or try this abbreviated link: CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Goes Into Production 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 * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| Haynes, Norcini, Arensberg wrap up precious metals' week at King World News Posted: 30 Oct 2010 03:42 AM PDT 10:40a CT Saturday, October 30, 2010 Dear Friend of GATA and Gold (and Silver): The weekly precious metals wrapup commentary at King World News features Bill Haynes of CMI Gold & Silver in Phoenix, Dan Norcini of JSMineSet.com, and the Got Gold Report's Gene Arensberg. You can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/30_... Or try this abbreviated link: CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy Resource Goes Into Production 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 * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| Fund Manager: Gold $10,000 An Ounce Posted: 30 Oct 2010 02:58 AM PDT There are gold bulls. And then there is Shayne McGuire. The 44-year-old pension-fund manager from Texas, who spoke recently at a gold conference in Berlin, caused a stir among the roomful of gold aficionados. His provocation: A book that predicts the price of the precious metal could soar to $10,000 an ounce, more than seven times its current price. Like those who once boldly predicted $1,000 Internet stocks and a 36000 Dow Jones Industrial Average, Mr. McGuire is a lone voice among mainstream investors suggesting such an outsize price jump in gold's price. Mr. McGuire's view isn't idle prognostication. He runs a $330 million gold portfolio at the Teacher Retirement System of Texas. Mr. McGuire's forecast, which he made in the recently released book, "Hard Money," makes him a very far outlier. Most on Wall Street consider the prediction outlandish. "If you missed" gold's recent run-up "you have to come up with some pretty sophisticated reasons to buy" now, says Andy Smith, metals analyst with Bache Commodities, a unit of Prudential Financial Inc. Mr. McGuire was early to the gold trade. In 2007, he and a colleague persuaded the $100 billion Texas fund, the nation's eighth largest, to move into the metal. It was a novel strategy that made it one of the few large U.S. pension funds to have a fund solely devoted to gold. At the time, gold was trading at around $650, less than half its current price. More Here.. 
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| Hathaway: Gold Will Outlive the Dollar Once Slaughter Comes Posted: 30 Oct 2010 01:33 AM PDT I was on the road visiting familythis week only to come home to see that my new internet provider is still having issues with the DSL line they installed at the house. Hopefully this will be resolved soon and I will get back to posting much more frequently. There are still some loose ends regarding the G20 finance ministers meeting I wanted to address. As for this article, from Bloomberg, it is interesting to see such topics covered on main stream media. Just a few years ago, such ideas would have been seen as extreme. The theory of this blog is well summed up by Hathaway in this Bloomberg article. The end of the dollar, if not fiat, is not a kooky topic covered by financial blogs. It is reality. It is an historical re-ocurrence, that is not unusual when one studies the broad history of money. We have only recently been "programmed" to think otherwise. Here's the article in its entirety: The world's monetary system is in the process of melting down. We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications. 
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| KWN Weekly Metals Wrap – Commercial Signal Failure? Posted: 30 Oct 2010 01:15 AM PDT HOUSTON -- It sure looked like the technical flag consolidations on gold and silver were resolving to the upside late week. Friday exhibited the kind of market action that strongly suggests motivated short covering ahead of the U.S. elections next Tuesday and the results of the U.S. Federal Reserve Open Market Committee (FOMC) meetings the day after. A kind of trembler rumbled through the silver market following the revelation of two class-action lawsuits filed against the largest bullion bank hedgers and short sellers (alleging manipulation in the silver futures and options markets), amid informed speculation by respected industry experts that physical supplies of commercial sized bars of the metal are likely not sufficient to handle unusually high and sharply rising demand. Perhaps that is precisely why, with silver close to 30-year highs, that the largest hedgers and short sellers of the futures have been unwilling to sell aggressively into this raging bull market for the second most popular precious metal. Indeed, the "usual suspects" (the largest commercial futures traders) seem to be more interested in reducing their net short exposure...
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| Posted: 30 Oct 2010 12:48 AM PDT Paul Volcker wrung inflation out of the system. Ben Bernanke is wringing cash-savers' necks...
A caveat: You shouldn't try trading in and out of Gold Bullion using this indicator. That plunge in real rates on the chart above, for instance, of early 1980 proved a feint, as investors soon discovered after piling back into gold when it bounced from a 40% plunge. Similarly, the rise in real rates of 2006 didn't make for a sell signal. The underlying trend, it turned out, was still down for rates...and up for gold. And short term, plenty of other factors can get in the way as well – be it mid-term US elections, the Indian festival season, or a global guessing-game of whether the Fed will print eleven or twelve zeroes after the figure $1 when it meets next week.
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| IMF's gold sales rose sharply in September Posted: 29 Oct 2010 06:37 PM PDT By Pedro da Costa and Emily Kaiser http://www.reuters.com/article/idUSWEN216120101029 WASHINGTON -- The International Monetary Fund sold 1.04 million ounces (32.3 tons) of gold in September, well above the amount sold in August, an IMF spokesman said on Friday. The sale was part of a plan announced late last year for the Fund to sell 403.3 tonnes of gold to boost its lending resources. The fund said the sale would avoid disruptions to the gold market, which has been buoyed by huge liquidity injections of central banks around the world. The IMF sold 320,000 ounces to Bangladesh, the spokesman said. ADVERTISEMENT Prophecy Resource Goes Into Production 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 * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| IMF's gold sales rose sharply in September Posted: 29 Oct 2010 06:37 PM PDT By Pedro da Costa and Emily Kaiser http://www.reuters.com/article/idUSWEN216120101029 WASHINGTON -- The International Monetary Fund sold 1.04 million ounces (32.3 tons) of gold in September, well above the amount sold in August, an IMF spokesman said on Friday. The sale was part of a plan announced late last year for the Fund to sell 403.3 tonnes of gold to boost its lending resources. The fund said the sale would avoid disruptions to the gold market, which has been buoyed by huge liquidity injections of central banks around the world. The IMF sold 320,000 ounces to Bangladesh, the spokesman said. ADVERTISEMENT Prophecy Resource Goes Into Production 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 * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| The Fed Underwrites Asset Explosion Posted: 29 Oct 2010 04:05 PM PDT "That the economists…can explain neither prices nor the rate of interest nor even agree what money is reminds us that we are dealing with belief not science." – James Buchan, Frozen Desire (1997) The Federal Reserve is in disarray. Unsure of whether its QE2 strategy (quantitative easing – second round) should be tabled (see speeches of Thomas Hoenig, president of the Kansas City Federal Reserve Bank) or if it should pump $10 trillion into the economy (the unsolicited advice from economic columnist Paul Krugman), the New York Federal Reserve Bank has now asked bond dealers what it should decide at its upcoming November 3 meeting. Since it is the belief in the integrity and competence of the Fed that backs the dollar, asking Wall Street what it wants is another reason to sell dollars. Two recent speeches by Federal Reserve officials clarify the dishonesty and paranoia of this debauched institution. Both were delivered on October 25, 2010. Speech number one is a fabricated history of the housing crisis, delivered by Chairman Ben S. Bernanke in Arlington, Virginia. He gave it at the Federal Reserve System and Federal Deposit Insurance Corporation Conference on Mortgage Foreclosures and the Future of Housing. The conference title alone is enough to know that no good will come from this boondoggle: "It was ultimately very destructive when, in the early part of this decade, dubious underwriting practices and mortgage products inappropriate for many borrowers became more common. In time, these practices and products contributed to problems in the broader financial services industry and helped spark a foreclosure crisis marked by a tremendous upheaval in housing markets. Now, more than 20 percent of borrowers owe more than their home is worth and an additional 33 percent have equity cushions of 10 percent or less, putting them at risk should house prices decline much further. With housing markets still weak, high levels of mortgage distress may well persist for some time to come. "In response to the fallout from the financial crisis, the Fed has helped stabilize the mortgage market and improve financial conditions more broadly, thus promoting economic recovery." You may note, not a word of the Federal Reserve's complicity – not its mad money expansion, not its one percent interest rate (the fed funds rate) that turned susceptible mortgage-buyers into highly leveraged speculators, not the Fed's decade-long enticement of Americans out of savings and into "risk assets," not its terrorist tactics at frightening the American people into saving the parasite banks, and then, having successfully terrorized itself, cutting the fed funds rate to zero, a condition that is suffocating the lower 99%. In Bernanke's final sentence (In response…), he claims the Fed saved the mortgage market and restored the American dream, or whatever the imposter is trying to sell. It would be more accurate to confess that if the Federal Reserve did not exist, there is a good chance there would have been no need to stabilize anything. There are moments when Federal Reserve officials speak the truth. In 1934, Eugene H. Stevens, chairman of the board of the Federal Reserve Bank of Chicago, spoke clearly about ridding ourselves of zombie banks. Quoting the October 24, 1934, New York Times: "The cleansing of the American banking structure of the parasites of 'occasional incompetency and dishonesty' in the last year and a half has put it in the strongest position of safety and good management." Two years after the United States missed its opportunity to clean house, the banking system is in a weak position of instability and bad management. Speech number two, by New York Federal Reserve President William C. Dudley, is an insult to anyone not getting rich within the parasitic Washington-Wall Street nexus: In response to a question from his audience at Cornell University, Dudley asserted: "To the extent that we can do things to improve the economic environment, we certainly owe it to the millions of people who are unemployed to do so." In his speech, Dudley, a former managing director at Goldman, Sachs & Co., described how the Federal Reserve has amortized this debt to the American people: "The Fed responded aggressively and creatively… [to the] financial crisis that broke in mid-2007…. [W]e took aggressive steps to ease monetary policy in order to support economic activity and employment…. When the Fed buys long-term assets, it pushes down long-term interest rates. This supports economic activity in a number of ways, including by making housing more affordable and boosting consumption in households that can refinance their mortgages at lower rates." In other words: the Fed has cornered markets in an attempt to induce overextended households to spend money again and restore an economy the Federal Reserve has hollowed out. Again, this is a warning to investors: any substantive rationale for holding assets that trade on markets needs to be weighed against the knowledge that prices are not real. There are consequences – intended now, unintended later – to trillion dollar experiments dreamt up by academic economists. Dudley said what is demanded of Federal Reserve officials when they discuss the bank bailouts: "A handful of times, we made the difficult decision to make emergency loans to prevent the disorderly failure of particular firms. We did so not because we wanted to help the firms, but because allowing them to collapse in a disorderly fashion in the midst of a global crisis would have harmed households and business throughout the United States." [My underlining.] Why does he use the word "firms" instead of "banks?" There is probably no Federal Reserve official who knows better the disorderly fashion in which the Too-Big-To-Fail banks collapsed. His then-current employer, Goldman, Sachs, an investment bank, had failed. It was saved by the dubious Federal Reserve maneuver of turning the investment bank into a commercial bank. Dudley told his audience to leverage its portfolios: "With regard to monetary policy, the Fed has in place a highly accommodative stance. The FOMC has said that it will keep short term interest rates at exceptionally low levels for an extended period of time. The Fed also retains large amounts of mortgage-backed bonds acquired in order to support the housing market and help bring down mortgage and other long-term interest rates to the historically low rates in place today. "The FOMC and the Chairman have stated their commitment to take further actions to bring interest rates down further should economic conditions warrant." Dudley avoids typical Federal Reserve euphemisms here. He states the Fed controls short-term interest rates, is supporting long-term interest rates (is preventing them from rising), and is supporting the mortgage market (is preventing mortgage securities and house prices from falling). Not in this speech, but elsewhere, Dudley and other Fed officials have indicated they are propping up the stock market. It is doing more than that: U.S. stocks have risen 10% since this latest Federal Reserve, carpe diem, open-mouth policy debuted last month. Federal Reserve ringmasters do not discuss how their capricious manipulations disturb the dollar's relationship with other currencies. When foreign buyers have decided it is time, the dollar, the stock market, the mortgage market, house prices, long-term interest rates and short-term interest rates will respond to the Bernanke "puts" just as they did to the Greenspan "puts" (the Nasdaq in 2000, houses in 2006). They will explode. Regards, Frederick Sheehan, [For more of Frederick Sheehan's perspective you can visit his blogs here and at www.AuContrarian.com. You can also purchase his book, Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009), here.] The Fed Underwrites Asset Explosion originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Barrick Gold CEO Discusses Q3 2010 Results - Earnings Call Transcript Posted: 29 Oct 2010 01:47 PM PDT |
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