Gold World News Flash |
- GoldSeek.com Radio Gold Nugget: Dr. Roger Tutterow & Chris Waltzek
- Crude Oil Boosted by Bullish Inventory Report, Gold Rises Back Over $1400 as Traders
- Going Back to a Gold Standard?
- Prepare for Mass Inflation
- SLV Dip Buying – Who is Selling Silver?
- Will Obama be Seoul Man Defending Fed at G20?
- Gold Daily chart
- CPPIB Overtakes the Caisse?
- Additional Thoughts: Look Out Below...Plus, Are Asian Silver Traders Taking On JP Morgan?
- Perfect Storm – February 2013?
- Precious Metals Become Polarizing
- John Embry: Die Was Cast Before Elections
- A Revisionist Greenspan Accuses America Of Weakening The Dollar
- Economic Irony: Creating Bubbles to Maintain Stability
- The Gold Price Must Beat Its Way Through $1,410 and Silver Through 2815c to Confirm an Upturn, Tomorrow All Will Be Clear
- Gold Doji Warns of Reversal
- You No Longer Have to Be Crazy to Buy Gold
- KingWorldNews: ‘Asian Silver vigilantes kicking shorts in the teeth’
- Dr Strangelove Or How I Learned to Stop Worrying and Love “Inflation”: Ben Davies, CEO of Hinde ...
- Western gold market riggers are running out, Embry tells The Gold Report
- NIA Releases Food Price Estimates For A QE2 World: Bread To $23.05, Corn To $11.43, $62.21 For Sugar
- Gold is a vote to throw the bums out of the investment world
- Why Commodities are Rallying as Currencies Decline
- Grandich Client Silver Quest Resources
- Missile Fired in Currency War?
- Charles W. Kadlec: Put gold at center of reforming world monetary system
- CURVE BALL
- How the US Will React to China’s Trade Surplus
- The Dollar or Toilet Paper… Which is Shrinking Faster?
- Latam Fever in Gold Mining
- End of the Statist Quo
- Money Creation and Price Inflation Cause Justified Paranoia
- US Mint Sales: Silver Eagle Coins Top 29M, Silver Proof Sets Dip Slightly
- Featured Coin News and Articles for November 7-13
- Coin History: “Crime of 1873″ Creates Coinage Chaos
- Gold Seeker Closing Report: Gold and Silver Fall Almost 1% and 6%
- Gonzalo Lira And The Boiling Frog: Effects Of QE2 On The Bottom 80% Of The U.S. Population
- Market Commentary From Monty Guild
- Hourly Action In Gold From Trader Dan
- Arbitration claim will target Morgan, HSBC for silver market rigging
- Die Was Cast Before Elections
- Cliff Notes Of Hedgeye's Take On A Paul Krugman Lecture: A Good Charlatan Who Still Doesn't Get It
- California Discloses A $25.4 Billion Budget Hole, Asks If It Should Pass The "Huge Challenge" To "Future Californians"
- Pricking the Bubble in the Yen
- BioTime Cracks the DNA Cell Command Code
- Ben Bernanke: The Chauncey Gardiner of Central Banking
- The CME Increases Silver Margin Requirements
- The Coming Gold Standard... Is the Internet Anti-War?
- LGMR: Gold Finds "Bargain Buyers" in China, Silver Rallies After 10% Plunge
- China Gold Demand To Likely Surpass India In 3-4 Years
| GoldSeek.com Radio Gold Nugget: Dr. Roger Tutterow & Chris Waltzek Posted: 10 Nov 2010 07:00 PM PST GoldSeek.com Radio Gold Nugget: Dr. Roger Tutterow & Chris Waltzek
|
| Crude Oil Boosted by Bullish Inventory Report, Gold Rises Back Over $1400 as Traders Posted: 10 Nov 2010 06:34 PM PST courtesy of DailyFX.com November 10, 2010 10:51 PM An extremely bullish inventory report offset early weakness in U.S. equity markets to send crude oil higher. Gold rose back over $1400, shrugging off a dollar rally. Commodities – Energy Crude Oil Boosted by Bullish Inventory Report Crude Oil (WTI) - $88.24 // $0.43 // 0.49% Commentary: Crude oil rose for the seventh time in eight sessions as an extremely bullish inventory report offset early weakness in U.S. equity markets. Crude settled at $87.81, up $1.09, or 1.26%, a new 25-month high, and decisively above the previous high for the year at $87.15. Prices are now in the process of breaking out of a 13-month range, which is extremely significant. There is little to stop the ascent in crude prices now that inventories are normalizing and the global economic outlook remains robust. While a minor correction here or there is always possible, the trend is higher and we expect oil prices to probe the $90’s in the ...
|
| Going Back to a Gold Standard? Posted: 10 Nov 2010 06:07 PM PST DID GOLD's first foray over $1,400 mean we're going back to a Gold Standard? Nope. Not in the West, nor anytime soon anywhere, and for three simple reasons. First, gold prices aren't high enough. Second, modern governments don't hold enough of the stuff – not for their tastes, at least. And third, the pace of physical monetization, out of jewelry and mined ore into coin and large-bar form, just isn't great enough. Yet.
|
| Posted: 10 Nov 2010 06:02 PM PST The thing that has sent me into Mogambo Panic Mode (MPM) over the terrifying inflationary implications is the latest outrage from the Federal Reserve, reported at Bloomberg.com as, "The Federal Reserve will buy an additional $600 billion of Treasuries through June, expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation."
|
| SLV Dip Buying – Who is Selling Silver? Posted: 10 Nov 2010 04:34 PM PST Got Gold Report We will get to an important look at the silver futures traders in a moment, but first, just below is our graph for iShares Silver Trust (NYSE:SLV) metal holdings. As the trading yesterday, Tuesday, for SLV resembled a wild roller coaster immediately following the CME’s announcement of higher margin requirements for silver futures, authorized market participants for the popular silver trust were in the process of issuing new shares and adding another 112.53 tonnes of new allocated silver bars to its inventory held by a custodian in London. Source iShares Silver Trust. SLV added about 3,617 or so new good delivery bars and now holds about 333.3 million ounces of silver, 10,366.03 tonnes which is a new record. Under the current custodian agreement JP Morgan Chase London has committed to provide up to 400 million ounces or about 12,440 tonnes of silver as needed by SLV. Therefore if there continues to be more buying pressure than selling pressure fo...
|
| Will Obama be Seoul Man Defending Fed at G20? Posted: 10 Nov 2010 04:08 PM PST
Marginal macro news, the upcoming G20 meetings, rising commodity margins, and enough uncertainty to make even Heisenberg jealous had the market once again bobbing up and down like Shyla Stylez trying to make her rent. We remain at a confusing time with economic data saying the market should go down (that economic data being a U6 unemployment rate higher Charlie Sheen's blood alcohol level on a Wednesday night, massive government debt that might even turn the immortal John Maynard Keynes into to an Austrian, and the world's global reserve currency fast on the way to becoming more worthless than a Chubby Cox rookie card) and yet algorithms, blind hope, and the Bernanke Put potentially lasting to in-fucking-inity keep supporting the market and edging it higher.
The bad news is that the day of reckoning may be coming, the good news is that nothing has collapsed yet, and the better news is that you can now use Facebook to tell the world that your boss is an assclown and not suffer any consequences (of course since Money McBags has no boss and still can't get his own Facebook page, that doesn't do much for him).
That said, there was a plethora of macro data out today as President Obama finally touched down at the spot of the G20 meetings and told the other 19 Gs to calm the fuck down about currency wars. In a letter to other leaders, the President said that US growth is the most important contribution the country can make for a global economic recovery (other than auctioning off a threesome with Raven Alexis and Audrina Patridge), that the strength of the US economy will determine the value of the dollar (horse meet cart, now get the fuck behind it), and that LeBron James is a bitch.
New claims for unemployment dropped to their lowest level in four months (until they are revised upwards next week) and registered 435k, down 24k from last week's upwardly revised 459k or 22k from last week's announced 457k as the "Hold the shock and hope for no awe" strategy once again rears its ugly head. Analyst guesses were for 450k so Money McBags would like to applaud them for at least getting the direction correct seeing as how not only are they relying on outdated assumptions of normality, but they are also guessing at completely made up data.
In other news, the trade deficit narrowed in the US as the weak dollar helped exports grow a whopping .3% to their highest level since 2008 when the Kim Kardashian sex tape first got international distribution rights. Also, mortgage loan applications rose 5.8% but still remain at historically low levels as "buying a new home" ranks up there with "getting involved in a land war in Asia," and "investing money with Bernie Madoff" on Americans' to do list.
In stark contrast to the US, China's trade surplus rose once again thanks to the Chinese government continuing to manipulate down the value of the Yuan and a surprising increase in the demand for pee pee flavored Coke (no joke). While China's trade surplus jumped from $16.9B to $27.1B the Chinese government decided to tighten bank rules in order to cool off their housing market which is expanding at a pace slightly quicker than whatever the pace is that causes bubbles (perhaps really fucking quick or quicklicious). With real estate in China threatening to mimic tulips in the Netherlands in 1637 or two lips of Brooklyn Decker wherever she goes, the government is now requiring banks to raise their reserves by half a percentage point which is the fourth such increase this year (with the fifth of course to come next month).
In the market Boeing crashed ~3% as their new 787 Dreamliner had to make an emergency landing as perhaps it was dreaming of Heather Vandeven which caused the lining of its circuits to short. As a result of the jet now being 3 years behind schedule and still working about as well as Carnie Wilson's lap band surgery, Boeing was taken off Goldman's conviction buy list and told to go to their room and not come out until they understand how they made the Goldman analyst feel.
Elsewhere, everyone seems to be raising their hands and shouting "I want BJs" as BJs Wholesalers shot up on news that the board is looking to sell the company. The company is rumored to be licking their lips over a ~$2.75B offer which would make it the most costly BJ since Monica Lewinksy frequented the oval office. Morgan Stanley was hired to give heads up advice and lead the deal team and they hope to have the sale humming along in no time.
Also, GM posted a $2B profit as they prep for their upcoming IPO and hope investors forget that they are a shittily run company while AIZ tumbled ~11% even after assuring investors that allegations of their policies for something called forced placed coverage being nefarious are way out of proportion, like Mayim Bialik's nose or Paul Krugman's reputation. Finally Polo Ralph Lauren galloped up ~8% after beating analyst guesses and raising guidance for the year. The company cited strong growth in footwear and apparel as well as "looking like a douche bag" being back in style.
As always, Money McBags has more at the award winning When Genius Prevailed.
|
| Posted: 10 Nov 2010 03:35 PM PST |
| Posted: 10 Nov 2010 03:13 PM PST
Karen Mazurkewich of the National Post reports, CPPIB sees big jump in assets-under-management in Q2:
|
| Additional Thoughts: Look Out Below...Plus, Are Asian Silver Traders Taking On JP Morgan? Posted: 10 Nov 2010 02:51 PM PST Housing - Zillow was out with a report today in which - well, I'll let the headline from the Housing Wire speak for itself: Home price depreciation to worsen market into 2011 Zillow's catalyst for this is higher foreclosure liquidations based on current delinquencies and the high degree negative equity embedded across home ownership. They forecast a price bottom in mid-2011. I will beg humbly to differ. They do not mention rising unemployment or higher interest rates. Throw that into the mix and I would argue that another big, long leg down is getting ready to commence. Here's the link to The Housing Wire's report on the Zillow report: Look out below. Interest Rates - Today's 30yr Treasury auction was very ugly. It required an over 50% takedown by the Wall Street banks (Primary Dealers) to get it done and it printed outside of the expected yield range. It looks like a couple western CB's also helped get the deal over the finish line. This ties into housing because it is going to require increasingly higher interest rates in order for the rest of the world to choke down our Government's insatiable spending appetite. Unless of course the Fed continues monetizing... Inflation - In conjunction with a couple of my posts on inflation over the past week or two, this one doesn't need much elaboration. From today's Financial Times: Food price fears as US warns on crop yields You can read the whole article HERE. It may require a free registration. Here's the salient quote: The agriculture department on Tuesday cut estimates of US corn yields for a third successive month, forecast record soyabean exports to China and warned of the slimmest cotton stocks since 1925. "The combined production shortfalls and dramatic potential stock drawdowns mean a much tighter supply picture than just a few months ago," the agency said in a separate grains report. Bottom line: it will cost a lot more to feed your family this winter... Is the BIG silver squeeze finally on? "Of course they are. $30 is just going to be a small pause along the way to much higher prices." Since 2002, I've been wondering when deep pockets would start taking on the massively illegal paper Comex/LBMA shorts in silver. Apparently that squeeze is being implemented by a group of Asian traders operating out of London. If you have not read this blog entry from Eric King's King World News, go grab yourself a cocktail and get ready to let this information grip your imagination. Here's the LINK. It would appear that this group of traders are not just using futures to fight the big banks who are short silver, they are backing it up with massive purchases of physical silver. I've always thought that this occur when the big accumulators of physical gold and silver could no longer buy what they want at these artifiicially low and highly manipulated price levels. That is, when a big perceived imbalance develops between demand and supply. The initiation of a paper squeeze would be designed to take the market up to a price level which would induce profit-taking sellers of large quantities. It will be interesting to see how the price goes before large scale selling emerges. It will likey be significantly higher than where the price is today. This afternoon we reloaded a lot of stock positions that we had liquidated on yesterday morning's bounce. If this intel is bona fide - and my gut instinct plus 9 years of experiencing in investing/researching/trading exclusively this sector tells me this is good information - then this move in silver is just beginning and the silver stocks - especially the juniors - will spike up to trading levels that will make Dennis Gartman pass out with shame. I'm off to NYC tomorrow for a long weekend. If you leave a comment after mid-day tomorrow, it likely won't get posted until Sunday evening. 
|
| Perfect Storm – February 2013? Posted: 10 Nov 2010 01:23 PM PST
I wish I could get a penny for every dollar that is going to be paid to lobbyist to fight the various recommendations of the Fiscal Commission. As advertised, they basically took no prisoners save a small portion of the older population that would starve without a monthly SS check. I think this exception was in response to the deficit panel being referred to as the “Cat Food Commission”. They may have dodged that bullet, but just about every other group in society is going to have a gripe. 4. Don’t Disrupt a Fragile Economic Recovery
|
| Precious Metals Become Polarizing Posted: 10 Nov 2010 12:03 PM PST To many in the banking and investing community, precious metals were the red headed stepchild. While they were easily accessible and extraordinarily undervalued, no one seemed to pay either gold or silver much attention. Until recently, when both have forged new highs, the opinions on each grow distant. The polarization from such "authorities" on the markets is overwhelming. Bubble Warnings The Telegraph in the UK has reported that the FSA, the Financial Services Authority, which is very similar to the United States' FINRA, has announced that commodity backed exchange-traded funds may be in a bubble. While physical buyers might agree that exchange-traded funds do make poor investments, the premise of their argument is absolutely ridiculous. Perhaps the most telling part of the FSA's complaint is their problem with physical backing of exchange-traded funds. The FSA worries that if each exchange-traded fund is in fact backed with metals, then prices will skyrock...
|
| John Embry: Die Was Cast Before Elections Posted: 10 Nov 2010 11:59 AM PST Source: Karen Roche and Brian Sylvester of The Gold Report 11/10/2010 Regardless of who's controlling the U.S. Congress, Sprott Asset Management Chief Investment Strategist John Embry holds out little hope for economic happiness in the short run. As he tells The Gold Report in this exclusive interview, "It's consequence time" and "any opportunity to have a pleasant outcome. . .in the relatively near term is long gone." John's view of equity markets is equally dim as he foresees the U.S. plowing deeper into quantitative easing to postpone—and maybe even exacerbate—the inevitable. An exception, at least for the time being, may be in senior gold stocks, which he says, "have seldom been cheaper in relation to the price of gold." The Gold Report: The last time we spoke, you said you'd gone long on precious metals and short on housing, banking etc., as you'd become more certain of your viewpoint. You said, "Everybody is being told things are fine and that the economy will r...
|
| A Revisionist Greenspan Accuses America Of Weakening The Dollar Posted: 10 Nov 2010 11:13 AM PST
Greenspan chimes in on the biggest debate of the post-Bernanke era, and says "America is also pursuing a policy of currency weakening." Duh. At this point we would love to ask the dear demented revisionist: just what on earth was your policy, Mr. ex-chairman, and why is "it" really known as the Greenspan Put? At the end of the day, does all the Fed do, aside from bubbles of course, is just create insane, cannibalistic, and completely revisionist, apparatchiks? Greenspan's garbled, meandering and completely meaningless essay below.
Those who wish to read more of this aneurism-inducing nonsense, may do so here.
|
| Economic Irony: Creating Bubbles to Maintain Stability Posted: 10 Nov 2010 11:00 AM PST "Global Backlash Grows," says The Wall Street Journal. This is the backlash against Ben Bernanke's crackpot money-printing scheme. The foreigners don't like it. Because the US is flooding the world with "hot money." This fast cash chases oil, commodities, collectibles, farmland – just about everything. It creates bubbles. It distorts markets. And it will certainly lead to busts and bankruptcies…and maybe to hyperinflation, too. So, sit back and enjoy the show, dear reader. It's the greatest show on earth. Yes, it will most likely lead to embarrassment and poverty in the US. Yes, the US dollar will cease being the world's reserve currency. And yes, America's leading economists – many of whom have won Nobel prizes – will be shown to be hapless goofballs. But this is all good news to us. Under the leadership of modern US economists, Americans have been getting poorer for the last 10 years. Why? How could that be? With the encouragement of the Fed and Congress, Americans consumed more than they produced. "Go out and buy an SUV," said a Federal Reserve governor. "Buy a new house," said Fannie Mae. "Spend, spend, spend," said mainstream economists. Result: Americans have less real, net wealth than they had when this millennium began. Now, finally, the average yahoo is wising up. He's lost this job. And he knows he's been played for a fool. But he's learning. He's defaulting on his mortgage…and he's paying down his debt. Consumer credit keeps contracting…it went down by $2.1 billion in September. But the feds have kept at it. They tempted him with lower interest rates: the Fed brought its key rate down to zero; it can't go lower. The Fed also bought up worthless mortgage loans so he could borrow more cheaply and took over Fannie and Freddie so they could continue suckering people into a lifetime of mortgage payments. The latest word is that losses from Fannie and Freddie could reach to $363 billion through 2013, according to the Federal Housing Finance Agency. But with Tea Partiers in the House…and the Fed hard up against the "zero bound," what else could they do? The Fed could print money! No need to ask Congress to pass spending legislation now. Forget what it says in the Constitution. The Fed can print money. And it can use the money how it sees fit – even funding an "off the records" stimulus program if it wants to. Each dollar is, in effect, a liability of the US government…engaging the full faith and credit of the government and its taxpayers. But what law was voted on? What act of Congress authorized spending billions of dollars? How came it to be that the taxpayers are on the hook for $600 billion more in financial responsibilities with no vote of their elected representatives? No point in even asking the question…. This is, after all, late, degenerate state-guided capitalism. If Congress can make citizens buy something they don't want – such as health insurance – surely the Fed, which is a privately-owned bank, can write checks from the taxpayers' checkbooks. Heck, nothing is too absurd. So, the Fed goes boldly where no sensible person would want to go. It is trying – trying! – to create bubbles…asset bubbles, to make people feel like they have more money. If people feel richer, the feds reason, they'll spend more money. Presto, we'll be richer. Are we beginning to rant and rave? Are we "losing it"? Is there a doctor in the house? Regards, Economic Irony: Creating Bubbles to Maintain Stability 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."
|
| Posted: 10 Nov 2010 10:30 AM PST Gold Price Close Today : 1399.10 
|
| Posted: 10 Nov 2010 10:25 AM PST courtesy of DailyFX.com November 10, 2010 07:37 AM Daily Candles Prepared by Jamie Saettele Gold formed a long legged doji yesterday after blasting through 1400. The extreme divergence with daily RSI is not conducive to additional gains. Dropping under 1366 would give scope to additional weakness....
|
| You No Longer Have to Be Crazy to Buy Gold Posted: 10 Nov 2010 09:55 AM PST ![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_2a.gif) No more. The long term structural demand for the yellow metal is now so well known, that I can read about it in the tabloids while waiting in line at Safeway. There is an emerging market central bank bidding war going on, with India and China trying to outmaneuver each other to raise their gold holdings to developed world levels. The EC or the IMF may sate that demand by selling off their remaining holdings to bail out Greece. A rising emerging market middle class also brings large, newly enriched consumers from countries that have long cultural preferences for owning gold and silver over paper fiat currencies. Now that we have decisively broken through to a new all time high, how high can we go? Surely peak gold is upon us. Barrick Gold (ABX), the world's largest gold producer, would not be hacking out new mines under incredibly harsh conditions at 15,000 feet in the Andes if there were easier supplies to develop. My own long term gold forecast has been the old inflation adjusted high of $2,300. But higher altitudes beckon. If you want to take gold up to its historic peak in world GDP last seen in 1980, that would see gold at $5,300. Also, keep in mind that the total world gold supply has increased since then from 110,000 tonnes to 170,000 tonnes. For gold to recover the old peak percentage of the world monetary base, M3, it would need to rise to $5,700. More Here.. The Missile Saga Continues: The Twitterati had a field day Tuesday, tweeting comments like "Can someone please tell me how our Department of Defense has no idea who launched a missile from California's coast?"; "So nobody in our government or military knows? Scary."; and "If you misplaced a missile off the coast of California, the U.S. government would like to have a few words with you." Contractor Who Got Stimulus Money Now Laying Off 1,400 
|
| KingWorldNews: ‘Asian Silver vigilantes kicking shorts in the teeth’ Posted: 10 Nov 2010 09:29 AM PST Asian Buyers Have Silver Shorts Checkmated “The CME are bandits”
|
| Dr Strangelove Or How I Learned to Stop Worrying and Love “Inflation”: Ben Davies, CEO of Hinde ... Posted: 10 Nov 2010 09:26 AM PST The gold and silver markets are telling you another story. "Gold is the hedge against political instability and government default." If you don't think the UK or for that matter another country can't default implicitly or even explicitly, I think one should go and sit under a big tree and really contemplate the facts. We are bankrupt actually and morally. Mervyn knows it and despite his desire to split the banks and get rid of fractional reserve banking, he knows he is powerless to alter the course of history which suggests a default of some kind is inevitable.
|
| Western gold market riggers are running out, Embry tells The Gold Report Posted: 10 Nov 2010 09:23 AM PST 5:16p ET Wednesday, November 10, 2010 Dear Friend of GATA and Gold (and Silver): Sprott Asset Management's chief investment strategist, John Embry, tells Karen Roche and Bryan Silvester of The Gold Report that Western central banks have been holding gold mainly for market manipulation but they're running out. Embry also discusses silver and offers some investment recommendations. The interview is headlined "John Embry: Die Was Cast Before Elections" and you can find it at The Gold Report here: http://www.theaureport.com/pub/na/7829 CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
|
| NIA Releases Food Price Estimates For A QE2 World: Bread To $23.05, Corn To $11.43, $62.21 For Sugar Posted: 10 Nov 2010 09:12 AM PST
On one hand we have the WSJ writing day after day that prices of food and energy products are not "really" rising. On the other hand we have empirical evidence that virtually every staple is already higher in price, or is being served in proportionally smaller portions. One possible arbitration on the issues comes from the NIA, which even if biased, does provide an estimate of where prices of various key perishables will end up in a post-QE2 world. These are as follows: "$11.43 for one ear of corn, $23.05 for a 24 oz loaf of wheat bread, $62.21 for a 32 oz package of Domino Granulated Sugar, $24.31 for a 32 fl oz container of soy milk, $77.71 for a 11.30 oz container of Folgers Classic Roast Coffee, $45.71 for a 64 fl oz container of Minute Maid Orange Juice, and $15.50 for a Hershey's Milk Chocolate 1.55 oz candy bar." Granted these are likely somewhat whimsical, but even if they are partially correct, it would mean the bulk of US society, as we pointed out previously, is in for a long, cold, hungry winter. From the NIA:
|
| Gold is a vote to throw the bums out of the investment world Posted: 10 Nov 2010 09:04 AM PST A 24-Karat Safety Net for Investors By Nelson D. Schwartz and Graham Bowley http://www.nytimes.com/2010/11/10/business/10gold.html Think of it as the Tea Party of investments. The price of gold has been rising as anxious investors cast what amounts to a throw-the-bums-out vote against, well, just about everything. The weak dollar, the volatile stock market, the lackluster economy, the yawning budget deficit, the accommodative Federal Reserve -- all this and more have people rushing for gold. The metal touched a high of $1,424 an ounce on Tuesday, although the price remains well below the peak of the early 1980s once inflation is taken into account. "It's in effect a protest vote that there's something amiss with current policies," said Abhay Deshpande, a portfolio manager with First Eagle Funds and a longtime gold investor. "People are almost acting as their own central banks because the advantage of gold is that it acts as a hiding place in times of currency turmoil," Mr. Deshpande said. A steady drumbeat of higher price targets from Wall Street firms -- as well as recent pronouncements from political leaders -- has buttressed what was already strong investor demand. ... Dispatch continues below ... ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Just as the Tea Party has moved from the political fringes to prominence in Washington, so gold has become a touchstone for policy makers and investors alike. On Monday the president of the World Bank, Robert B. Zoellick, surprised experts when he suggested that the price of gold should be considered a financial yardstick, reversing 40 years of relying on paper currencies to store value in the international monetary system. Deemed intrinsically valuable for thousands of years, gold has traditionally been a hedge against rising inflation and political or economic uncertainty. But this time around investors worry that the Fed's move last week to pump $600 billion into the nation's banking system, as well as a surge in borrowing around the world, will undermine paper currencies, making gold a refuge once again. Over the last two months the dollar has declined 6 percent against its principal peers, but gold has jumped 17 percent. At an investor conference in Berlin, whether the worry was inflation, deflation, sovereign debt risk, or currency instability, "market participants looked to gold as a potential answer," said Suki Cooper, precious metals analyst for Barclays Capital. But it is Washington that has prompted the latest surge. "As the Fed prints money, markets are anticipating that more dollars will be chasing the same supply of commodities, driving prices higher," said Daniel Arbess, manager of the Xerion fund at Perella Weinberg Partners in New York. And while gold is the most obvious example of this trend, other commodities are rising too. Wheat, copper, and cotton all soared on Tuesday. Nor is gold fever restricted to hedge fund managers wielding billions of dollars. Individual investors have also been clamoring to get in on the trade, scooping up gold coins like 1-ounce American Eagles and South African Krugerrands. "People are coming in to buy 50 or 100 coins at a time, which is pretty hefty for individuals," said Mark Oliari, chief executive of CNT Inc., a Massachusetts coin broker. "It's not just rich people, either. A lot of people are putting 30 to 35 percent of their net worth in gold; they are scared to put money in paper assets." Signs of gold's renewed appeal have been building for months, as well-known Wall Street figures like George Soros and John Paulson piled into the metal. JPMorgan Chase even reopened a long-closed vault below the streets of downtown Manhattan to meet investor demand to store the stuff. And the comments by Mr. Zoellick on Monday only confirm gold's new status. "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation, and future currency values," Mr. Zoellick said in an article in the Financial Times. "Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today." But in a sign of how volatile gold remains, it closed sharply lower at $1,392.90 on Tuesday, down from the intraday high of $1,424, after comments by the governor of the Bank of Canada, Mark J. Carney, that gold "has no role to play in the international monetary system," according to Reuters. As gold has become more respectable, it has also become easier to invest in. Some people may still regard bars of gold in a vault as the ultimate insurance policy, but exchange-traded funds, or ETFs, that hold gold have also exploded in popularity. Besides driving down the dollar's value by sharply increasing the amount of dollars in the system, the Fed's action also helps gold by lowering interest rates. That is because a traditional knock on gold is that it doesn't yield interest payments or dividends, but with short-term rates closing in on zero, there is much less to lose by holding gold. In addition to the opposition from investors, the Fed's decision to pump $600 billion into the banking system, a policy known as quantitative easing, has met with sharp criticism from several of America's crucial trading partners, including Germany, China, and Brazil. They say flooding the world with unwanted capital at a time when their own economies are already growing at a brisk clip increases the odds of inflation down the road while encouraging one country after another to devalue its currency. As the dollar has fallen, countries like Thailand, Japan, Brazil, and others have taken steps to weaken their own currencies, in what some see as the beginning of a race to the bottom. "This bears some resemblance to the 1930s and the beggar-thy-neighbor strategy of currency depreciation between the pound, franc, D-mark, and dollar," said James Steel, chief commodities analyst at HSBC. "In that period gold also did very well." Since the depths of the financial crisis two years ago, gold has risen 91 percent, and it is nearly a third higher than just one year ago, according to Janney Montgomery Scott. While gold has touched new records in nominal terms, when adjusted for inflation the price remains 40 percent below its real record high, which was reached in 1980. What is surprising economists is not the rise of gold prices, but the speed of its ascent. As a result, even longtime gold investors, like Mr. Deshpande, worry that the current rally might be overdone. "It's beginning to smell a little like the beginning stages of a bubble," he said. "Either inflation has to pick up or currencies have to plunge to justify a continuing rise." Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php
|
| Why Commodities are Rallying as Currencies Decline Posted: 10 Nov 2010 09:00 AM PST Cotton…silver…palladium…nickel…corn. What do these things have in common? Answer: They are not a dollar bill. And neither are they a euro (EUR) or a renminbi (CNY) or a rupee (INR)…or any of the other currencies that central bankers around the world are aggressively debasing. "It's not just our own Federal Reserve that wants to destroy its currency," observes Chris Mayer, editor of Capital & Crisis. "It seems everybody is doing it. As Eric Sprott, a great investor hailing from the Great White North, recently noted in his Markets at a Glance letter: 'By our count, no less than 23 separate countries have now intervened in the foreign exchange market in some way since Sept. 21, 2010. The goal for all is to increase the supply of their respective paper currencies in order to drive them down in value.' "Investors, though, aren't dummies – at least not always. That's why real assets are rallying."
The nearby chart tells the tale. Commodities, as an asset class, have become quasi-currencies. From gold to coffee to cattle, commodities of all types have been soaring in price, ever since the Federal Reserve publicly declared its war on deflation. General Bernanke vowed to conduct this war aggressively and to utilize a battlefield tactic he called "quantitative easing." The war has been underway for several months, but victory is nowhere in sight. Instead the battlefield is littered with the remains of dollar bills that once seemed so powerful and full of potential. Seeing the results of this campaign, investors are growing increasingly fearful of taking sides with the US dollar. Instead, they are placing their security in the hands of gold, silver, platinum and numerous other commodities. As such, every major commodity has outperformed the S&P 500's 8.8% gain for the year to date. Only zinc and cocoa trail behind. In a world where every major paper currency is suspect, gold is a compelling alternative. But it is not the only alternative. As reliable stores of value, a bale of cotton or a bushel of wheat also seemed preferable to paper currencies. "And, as if [commodities] needed another reason to rally," co-editor, Joel Bowman, observed earlier this week, "China is betting on 'stuff' over 'paper.' "Reports Barron's: 'This year, for the first time ever, China has been investing more overseas in assets like iron, oil and copper than it puts into US government bonds. "'China in this year's first half spent $31 billion on hard assets,' the journal continues, 'compared with $23 billion on Treasuries and other US government bonds. Experts say China's investments in each of these asset classes will total about $55 billion for the full year. But even a tie marks a major turnaround from China's previous practices. For many years, the mainland spent next to nothing on hard assets abroad, while its purchases of US government debt ranged as high as $100 billion a year.'" Monetary tastes and habits – like culinary tastes and habits – do not change overnight. But once these habits begin to change, they rarely regress to their previous condition. General Bernanke would be unwise to ignore this tendency of human behavior. McDonald's opened its first restaurant in China in 1990 – trying to sell hamburgers to rice- and chicken-eaters. Twenty years later, 1,100 McDonald's restaurants dot the Chinese landscape…and 1,000 more will open by 2014. Tastes rarely change quickly, but when they do change, they usually change forever. The Chinese, the world's largest buyers of Treasury debt, are slowly changing their monetary tastes and habits – preferring hard assets over US paper. Likewise, global commodity markets are telling us loud and clear that many, many investors around the world are also changing their monetary tastes and habits – also preferring hard assets over US paper. But in the midst of these evolving long-term trends, short-term counter-trends sporadically arrive – usually with a surprising fury and intensity. Yesterday was one of those moments. Gold, silver and platinum, along with almost every other major commodity traced out what chartists call an "outside day reversal." In other words, these commodities advanced strongly early in the trading session to exceed the prior day's highs, but then reversed later in the trading session to finish the day below the prior day's lows. And most of these commodities performed this volatile feat on extremely high volume. Net-net, a classic outside day reversal – the kind of pattern that usually signals the end of the rally, at least temporarily.
"This could be a blowoff day for the precious metals," options pro, Jay Shartsis remarked during yesterday's trading session. "I note the SLV (IShares Silver Trust) is trading huge volume. It opened at $27.80 and hit $28.30. If it closes near the bottom of the day, a sharp drop seems likely. First hint will be a decline below the opening of $27.80…I am buying puts on Pan American Silver" Three hours after Jay's missive, SLV closed the trading session at $26.18, thereby confirming his bearish expectation. So the red-hot precious metals sector has decided to take a well-deserved breather. In all likelihood this breather will last a while – a few days at least, a few weeks perhaps. But the long-term trend for silver, gold and most other commodities remains unchanged. As long as the Fed and 22 other like-minded central bankers are racing one another to devalue their currencies, commodities will remain "well bid." "If you are worried about gold tanking, you shouldn't be," says Chris Mayer. "Gold has lots of room to move higher. It is a metal whose value depends on the dilution of paper currencies. As the central banks of the world have expressly told us that they intend to dilute their currencies, you should have few worries about gold's price…and natural resources should still be a good sandbox to play in to make a lot of money and protect your wealth against inflation." Amen. Eric Fry Why Commodities are Rallying as Currencies Decline 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 Silver Quest Resources Posted: 10 Nov 2010 08:50 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! November 10, 2010 12:14 PM Silver Quest Resources (SQI-TSX-V)published some results from two drill holes on their Capoose Deposit in central BC this morning.* Silver Quest completed two phases of drilling at Capoose this year, one starting in May and ending in early July, the other starting in late August and ending in late October.* A total of 37 drill holes were completed producing over 10.5 km of drill core.* The two holes announced this morning are from the first phase of drilling, and confirm that mineralization occurs in a previously untested area of the deposit and extends the mineralization east of the west arm. When Silver Quest set out to drill Capoose this year the goal was to grow their 1.32 million ounce gold equivalent deposit, add some base metal credits to the resource and to move some of the inferred resource into a measured an...
|
| Missile Fired in Currency War? Posted: 10 Nov 2010 08:50 AM PST The 5 min. Forecast November 10, 2010 12:57 PM by Addison Wiggin [LIST] [*] The “mystery missile”... First shot fired in currency wars? [*] G20 summit preview: China premier tells U.S. to “face their own problems” [*] Markets sell off, silver down nearly 8%... The rumor that may be behind it all [*] Why Patrick Cox sees the election results as “a good thing for investors and innovation” [*] Readers go off on fellow reader: “Indestructible fantasy world” and Nazi name-calling [/LIST] Hmm. The G20 summit starts tomorrow amid the prospect of global currency wars… and… this… As viral video goes, chances are good you’ve seen the “mystery missile,” captured from a TV station’s helicopter roughly 35 miles off the coast of Los Angeles. “It could be a test firing of an intercontinental ballistic missile from an underwater submarine,” Robert Ellsworth, a former U.S. amb...
|
| Charles W. Kadlec: Put gold at center of reforming world monetary system Posted: 10 Nov 2010 08:40 AM PST Time To Reform The International Monetary System By Charles W. Kadlec http://www.forbes.com/2010/11/10/currency-monetary-policy-china-opinions... A funny thing happened on the way to the G-20 meeting in Seoul, South Korea, this week: The world's growing dissatisfaction with U.S. policy toward the dollar has derailed the Obama administration's proposal to elevate trade balances as the reference point for currency values. Instead of asserting America's traditional leadership role, President Barack Obama is confronting calls to replace the United States -- and the dollar -- as the center of the international monetary system. The no-confidence vote led by China, Japan, and Germany and supported by Brazil is the direct consequence of the Obama administration's embrace of a Nixonian, weak-dollar policy as it struggles to resuscitate the U.S. economy. Blaming the Chinese renminbi-dollar exchange rate for high U.S. unemployment is eerily similar to the claims made by President Richard Nixon when, in 1971, he promised that suspending dollar/gold convertibility and an 8.5% devaluation of the dollar would make American labor more competitive. ... Dispatch continues below ... ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Like President Nixon, Treasury Secretary Timothy Geithner claims that the United States supports a strong dollar. But just as in the early 1970s, the U.S. is unabashedly following an easy-money policy at home while letting the dollar fall on international currency markets. With the world's monetary system tethered to the dollar, this mix of U.S. policies led to the great, global inflation of the 1970s. No wonder the scramble is on to find a permanent replacement for the dollar. The surprising answer may turn out to be a gold standard designed to reflect the realities of a 21st-century global economy. World Bank President Robert Zoellick, writing in last Sunday's Financial Times, broke a sound barrier among the leadership of the Group of Eight industrial countries with regards to restoring gold to a central role in a new, international monetary system. Such a system, he wrote, "is likely to need to involve the dollar, the euro, the yen, the pound, and the renminbi. ... The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today." Zoellick's proposal should be considered for several reasons. First, the leading alternatives to gold would represent a grand new experiment in operating the international monetary system, introducing yet more uncertainty into a developed world struggling to recover from financial crisis, and a developing world attempting to cope with an unstable dollar and hot money flows. No single currency has the credibility or liquidity to displace the dollar. The sovereign debt crisis among E.U. countries limits the euro's role, while lack of infrastructure and liquidity -- and political risks -- rule out the renminbi. And the central banks of Britain and Japan have not shown themselves to be particularly skillful in providing a stable currency within their own economies. A basket of currencies, codified in an elevated role for the IMF's Special Drawing Rights as an international medium of exchange, would face an extraordinary number of technical and pragmatic obstacles. Who would be empowered to decide the appropriate quantity of SDRs in the world? What agency would conduct the equivalent of open market operations? Empowering a new panel of men and women to manage the world's currency system would raise more questions than it would answer, potentially triggering yet another currency crisis. Patching up the current system of floating exchange rates will not provide a solution. Floating exchange rates have simply failed to fulfill their promise of addressing global trade imbalances. For example, since 1967 the dollar has been devalued by 72% against the euro and 75% against the yen. Yet net exports have gone from a modest surplus in 1967 to a $390 billion deficit -- equivalent to 2.7% of GDP -- in 2009. Given this history, the claim that greater currency flexibility can be used to reduce trade imbalances, or that if the Chinese would allow the dollar to fall by 20% or 40% against the renminbi the U.S. economy would be stronger and the unemployment rate lower, is simply not credible. Finally, the longer the floating exchange rate system has been around, the more frequent and more intense the international crises. The 1970s were marked by oil shocks of 1973 and 1979, the 1980s by the Latin American debt crisis and the stock market crash of 1987, the 1990s by the Mexican peso crisis and the Asian currency crisis, and now the 2008 international financial crisis, the European sovereign debt crisis, and the threat of a currency war. During the Bretton Woods era of the 1950s and 1960s, the dollar was a reliable means of exchange. It delivered stable prices, facilitated the post-World War II economic "miracles" of Western Europe and Japan, and helped a 20-year period of 4% growth in the United States. The different results between that era, in which the dollar was linked to gold, and the growing uncertainty and instability of the past 40 years, show that it was gold, not the dollar, that provided the vital ingredient for a growing world economy, price stability, and modest trade imbalances. Restoring gold's role as the key reference point therefore should be at the top of the G-20's agenda for reforming the international monetary system. ----- Charles W. Kadlec is a member of the Economic Advisory Board of the American Principles Project, an author, and the founder of the Community of Liberty. He can be reached at charles.kadlec@communityofliberty.org. Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
|
| Posted: 10 Nov 2010 08:34 AM PST By Toby Connor, Gold Scents Since June the dollar has been collapsing down into a yearly cycle low. I didn't expect that low until the dollar reached at least 74 and I thought it even more likely we would see 71 before the cycle bottomed. However yesterday the dollar through us a major curve ball. What should have been a minor bear flag that would resolve with a downward break has gotten unexpected traction. Yesterday the dollar broke the down trend line and it now appears clear that the dollar has formed a shortened daily cycle low.
 If the dollar rises above 78.36 it will reverse the pattern of lower highs and the odds will rise significantly that we now have a shortened intermediate cycle bottom also.  If that turns out to be the case then we can probably expect stocks and gold to turn down into an intermediate correction. The stock market is definitely due for the intermediate correction as it is on week 19. (The cycle usually runs about 20 to 25 weeks so a top is now due.) The gold cycle is a bit shorter at 15 weeks but still in the timing band for a top. If we end they week about where we are today then gold will form a perfect exhaustion candle on the weekly charts.  This is why traders can't leverage themselves to the moon. These curve balls happen. If you get caught by one of these and you are leveraged to the max you will do catastrophic damage to your portfolio. Trust me when I tell you this. Massive leverage always ends in a blown out account. There are never any exceptions to this rule. Never!        Toby Connor A financial blog primarily focused on the analysis of the secular gold bull market. If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.
|
| How the US Will React to China’s Trade Surplus Posted: 10 Nov 2010 08:33 AM PST What do I see front and center this morning on the currency screens? A nasty sell-off in the currencies and metals that began yesterday afternoon, carried over to the Asian markets… Gold had lost the $1,400 figure in the profit taking yesterday, but has rallied back $9 this morning to push past $1,400 again. Silver, which yesterday morning looked like it was going to be on a straight line to the moon, also sold off in the late afternoon trading, but like gold, has rebounded in the morning trading. "This is just monetary policy"… Those aren't my words… Those are Big Ben Bernanke's words at the Jekyll Island Jamboree last weekend, when he was being dissed for implementing another round of quantitative easing (QE). Gee, it's nice to know that he takes this stuff seriously, eh? Memo to Big Ben… QE is printing of money… And money supply is in its base form, inflation… It's that simple! The Fed Heads have said over and over again that inflation in the US is too low… I beg to differ with them… (See yesterday's Pfennig "Gold and Silver Surge Higher" for a discussion on inflation…) But on the thought that the Fed Heads believe inflation is too low, I heard a great line from James Grant (editor of Grant's Interest Rate Observer) who quipped, "That's like the New York Police Department complaining about the lack of crimes." The news this morning includes a report from China that is sure to get the boys on "the Hill" all lathered up… China posted a larger than forecast trade surplus in October of $27.1 billion, which is a 22.9% gain from a year earlier… Yes, the "boys" are not going to be happy to hear this news, and I think we'll hear more saber rattling for faster currency appreciation from China, and… Trade sanctions… UGH! Here's what I see… China really began putting the pedal to the metal with currency appreciation in October, but even if they keep their foot on the accelerator it's going to take a very long time to change or rebalance China's economy, folks… I would caution the "boy" on the "hill" to have patience, and not do something that would hurt trade… Chinese renminbi (CNY) has gained over 2% in the past 3 months, which I believe to be a "fast enough pace" for currency appreciation… If at the end of next September we see that the renminbi is up over 8% in that time period, then I think that's a good thing… A nice "steady as she goes" pace, without inflicting major harm on the Chinese economy! China also raised their reserve requirement for banks by 0.5%… this move has scared the bejeebers out of the risk takers, and the selling that began yesterday afternoon, has really picked up overnight. Why would this reserve requirement rate hike in China scare the risk takers? Ahhh grasshopper, come…sit… China is the proxy for global growth, and if they apply the brakes by taking liquidity out of the economy, then that's going to hurt global growth, which is what the risk takers are all about! We're going to have to be patient and let this reserve requirement rate hike work its way through the markets. I just don't see anything but short-term rallies in the cards for the dollar, as I keep coming back to the thought that the dollar just doesn't offer investors any yield… And won't for some time! The guys over at Market Rates Insight, Inc. sent me this note yesterday… The national average for all deposit products, the average rate for CDs, including Specials, now dipped below one percent for the first time since rate data has been recorded. The average rate for CDs ranging from 3 months to 5 years, including all Specials, reached 0.99%… So… US investors/savers have that going for them… NOT! Leads me to talk about something that I've been talking about in both my paid subscriber newsletter, and my presentations… And that is… Looking for income… Because you're not getting it from US dollar bank accounts! (Of course, excluding my bank, EverBank, where yields can still be gotten!) The thing to think about, folks, is this… You can pick up yield in foreign investments, because of different rate/economic cycles. And when you "lock in" a yield for a time period, you are sure to get it! Of course, the interest will be paid in the foreign currency that the principal is denominated in, and the value of the interest is dependent on how the currency performs… But again, think about this… Most US savers receive their interest, and then roll it into the principal for another time period… You can do the same thing with a currency CD… Any way you look at, you get a pickup in yield, and you have diversified at the same time! Alrighty then! Well… The New Zealand dollar/kiwi (NZD), is still getting sold because of the news coming from the kiwi-fruit fields that at least 18 orchards are suspected as being infected and possibly diseased. Take that news and mix it with some dovish remarks by Reserve Bank of New Zealand (RBNZ) Gov. Bollard, and kiwi-currency weakness is the result… The top Fed Head in Dallas, Richard Fisher, was talking yesterday, and said something that just didn't rhyme for me… Fisher said, "All of us are believers in a strong dollar policy. We want to make sure that the dollar has its purchasing power, and we want to make sure it is of great international standing." Hmmm…. That all sounds good, but it just doesn't rhyme with the actions of the Fed Heads… Two rounds of quantitative easing, cutting and leaving interest rates at near zero for far too long, ballooning the balance sheet, secret deals on Treasury auctions… These just don't add up to what Fisher is saying his fellow Fed Heads believe… But you can make that call yourself… I'm sure you'll agree with me that they don't add up… On a side bar… I have to wonder now with the latest round of QE if the Fed/Cartel's independence is going to be taken away… A reader sent me the following story that plays well with that thought of mine regarding the Cartel's independence… Ron Paul, the Republican Congressman from Texas, is the ranking member of the monetary policy subcommittee, and when the next Congress takes over he'll likely be the chairman of the subcommittee. And Congressman Paul has some big plans. "I will approach that committee like no one has ever approached it because we're living in times like no one has ever seen," Paul said in an interview with NetNet Thursday. Paul said his first priority will be to open up the books of the Federal Reserve to the American people. "We need to create transparency there. To see what it is they are buy buying and lending, and who it is they are dealing with," Paul said. I've always liked Ron Paul's economic thoughts… He's one of the few followers of Austrian economics in Washington… My friend, and writer extraordinaire, David Galland, had some great thoughts on the US debt situation in his letter yesterday. Here's a snippet of David talking about the dire situation regarding US debt and money printing… Unfortunately, the scale of the problems now facing the US have reached the point where…
It is, however, our contention that this charade cannot last. A sentiment shared, it is clear, by the number of big money players recently piling into sound money. There are a number of big questions yet to be answered, but the core issue surrounding the ability of the US government to meet its obligations using normal operations is not one of them. It can't. Therefore, by definition, it must either default or attempt to debase the dollar to the point where fixed-amount obligations erode back into a range where they can be paid. Thank you, David… You always say it 10 times better than I would! And one more thing before I head to the Big Finish… US Treasury yields are moving higher once again… The 10-year jumped 20 Basis Points yesterday to 2.72%! WOW! OK… Before I go out and make statements that the Treasury Bubble is popping, let me remind you that the Fed is going to be buying $600 billion in the coming months… But this Treasury yield bump higher could provide the dollar some strength… Then there was this… Remember about a year ago, I told you about the Chinese organization that downgraded the US's credit rating? Well, they're at it again… "The Federal Reserve's plan to buy $600 billion in government debt prompted Dagong Global Credit Rating to lower its credit rating for the US. The Chinese credit rating agency cited the country's deteriorating intent and ability to repay debt as it downgraded the US from AA to A+. 'The serious defects in the US economy will lead to long-term recession and fundamentally lower the national solvency,' according to a report from Dagong." To recap… The dollar rallied yesterday afternoon and in the overnight markets pushing the currencies and precious metals down. Gold and silver rebounded some this morning, but not the currencies. China's raising of their reserve requirement, really took the wind out of the sails of the risk takers, and it's definitely a "risk off" day in the markets. New Zealand's kiwi-fruit industry is under deep pressure after at least 18 orchards were found with diseased vines, and then RBNZ Governor Bollard had some dovish things to say. Both of these items have kiwi-currency beaten and battered. Chuck Butler How the US Will React to China's Trade Surplus 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." More articles from The Daily Reckoning….
|
| The Dollar or Toilet Paper… Which is Shrinking Faster? Posted: 10 Nov 2010 08:31 AM PST In the middle of last month, before Bernanke's dream of QE2 became a reality, he described that "inflation is running at rates that are too low." By "too low," he meant of course that inflation is too low to keep artificially propping up asset prices, like the major market indices which in his opinion ought to give the US economy a shiny veneer of growth despite little underlying improvement in production. Given this intended outcome, quantitative easing is at best a gimmicky strategy. What makes it far more pernicious though, is the weak premise that inflation is actually too low. When you consider the methods he's relying upon for measuring it, you get the impression he wouldn't note so much as a mild inflation uptick for a hot air balloon lifting off of the ground… but, we'll explain more about measuring inflation below. First, assuming Bernanke will in fact be successful in sparking inflation, how will a rising-prices environment impact the average wage-earner? Gonzalo Lira takes a closer look: "Even in the best of economic times, wages and salaries do not rise in lockstep with an expanding economy. And we are currently not in an expanding economy. It is reasonable to assume that, during a period of steadily rising prices coupled with stagnant economic growth, wages and salaries will not rise for at least six months, if not longer… "Wages are key. If inflation hit consumer prices as well as wages in equal measure, the net effect would be zero—which is more or less what you see in ordinary expansion-driven inflation, the kind prevalent in healthy economies: There are price pressures on commodities, which eventually translate into higher prices at the supermarket—but there are also price pressures on wages, as the economy in toto is expanding, and therefore bidding up scarce labor as it grows. In an expanding economy, prices might be rising—but wages are rising too, so no complaints. "However, in a stagnating or contracting environment—such as what we are experiencing now in the American economy—there are obviously no pressures on wages: If anything, there are downward pressures on wages and salaries. So if commodity prices rise, people—especially the poor, the working poor, and the middle-class, but maybe even the upper-middle class—are really going to take a hit, as more of their after-tax income goes to paying for basic necessities. "Some people might think that the debasing of the dollar via QE2 will mean that the real cost of housing will fall, as rents and fixed mortgages will be undermined by inflation. They might think this is a good thing. But this only makes sense if your earnings are absolute: If you're boss is paying you in gold coins, or silver ingots. But if you live on a dollar income, especially a fixed income—as so many seniors do, let alone the average wage earner—even if your housing costs remain nominally static, rising food, transportation and clothing prices will still take bigger and bigger bites out of that dollar-based income." So what's problematic about measuring inflation? A vivid modern-day example can be seen in this infographic, which shows how even lowly toilet paper is shrinking in size right under our noses, so to speak. According to Gonzalo Lira, this subtle type of inflation, which occurs in stripped-down utility but not reduced prices, is not tracked by the CPI. As long as the same product is sold for the same price — despite markedly reduced customer value — prices are computed as holding level. Domestically, Bernanke and the Fed are likely anticipating that shoppers won't notice when they're paying the same price for less merchandise every time the cashier rings them up. Internationally, the Fed's employing a similar tactic, diminishing the dollar so US exports look less expensive abroad and so the US' massive debt appears a little bit less so. The US isn't the only nation adopting this "currency war" approach to global trade, but — given that the dollar is in many ways leading the major currencies in the devaluation race — let's hope Bernanke doesn't end up taking a few too many cues from toilet paper. You can read more details in Gonzalo Lira's post on how QE2 will have a boiling frog effect on the bottom 80 percent of the US population. Best, Rocky Vega, The Dollar or Toilet Paper… Which is Shrinking Faster? 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." More articles from The Daily Reckoning….
|
| Posted: 10 Nov 2010 08:30 AM PST Bullion Vault Latin America holds big promise for Gold Mining investors… VICE PRESIDENT of Institutional Mining Sales at PI Financial, David Goguen specializes in the mining sector. As Here he speaks to The Gold Report about PI Financial's recent institutional sales-desk report, Select Golds: Latin Focus and his methods of analysis. The Gold Report: David, you recently published a report titled Select Golds: Latin Focus. Tell us about your report. David Goguen: With One objective of our report is to look for TGR: Can you define advanced explorer? TGR: How can an investor differentiate an explorer with good chances of success from an explorer that's unlikely to succeed? David Goguen: TGR: You rank all of the companies in each David Goguen: We TGR: That's a fairly simple calculation. David Goguen: It The TGR: David Goguen: TGR: Are there factors that these companies being taken over have in common? David Goguen: We're coming out of an era TGR: David Goguen: TGR: David Goguen: I think as a group we've A number of these companies with a dynamic TGR: How about some parting thoughts on this particular report and these kinds of companies? David Goguen: That's a powerful theme that's TGR: David, sounds like some exciting opportunities ahead. Thanks for your time.
|
| Posted: 10 Nov 2010 08:30 AM PST Bullion Vault To be otherwise in the face of the decades-long trend toward ever more government – along with its increasingly destructive and expensive meddling in the free markets – would have been foolish. And, so far, we have been right. However, I for one am beginning to see some light at the end of the tunnel. It won't happen overnight, and maybe not in the next five to ten years, but it increasingly appears to me that the government's disastrous "problem solving" that has brought us to this place is approaching a limit. Case in point, governments the world over are now engaged in an insane race to the bottom for their currencies – which will only gain speed if the Fed goes ahead with a new round of quantitative easing. Should the Fed persist with this latest madness, countries all over the globe are likely to step up their own interventions – but that may very well lead to the fiat system breaking down completely, to be replaced by something more tangible. Likewise, given the increasingly dire need to spur economic growth, we could soon see an end to the growth in bureaucracy and the fire hose of taxes and regulations that those bureaucrats have been spraying over the global economy for decades. Put another way, having squandered so much of human progress through counterproductive policies, any leader that wants to retain power – and they all want to retain power – is soon going to be forced to return to policies that have been proven to allow businesses to blossom. This sea change won't happen all at once – and probably not without the global economy first going through a dark and troublesome period. But I have to believe that we'll soon see a widespread recognition that there are problems to be solved, and opportunities to be captured, by breaking from the herd. Thus, while one state tries to raise taxes to "solve" its budget problems, another will see the opportunity for growth to be had by lowering taxes. While one government passes more regulation to pander to a favored group, another will repeal legislation to lighten the dead hand of government in order to favor all. In reasonably quick order, the governments that reduce, rather than increase, their burden on their business communities will see their economies begin to prosper while others stagnate – just as they always have. The United States in its youth provides the paradigm of this principle, but Hong Kong, Singapore, Dubai, and a handful of other, less pure examples prove the point as well. In support of this general theme, subscriber D.W. recently sent along an interesting piece on boom times in a Swiss canton that is picking off the hedge fund managers being chased out of the UK by the 50% tax now being levied on earnings of over £150,000 a year. And I quote…
Why am I so confident that following another round or two of desperate, last-gasp efforts to maintain the statist quo, we'll see a shift to a global competition based on free-market policies and hard money? Simply because when there is only one path left, the choice of where to go next becomes obvious. Or as one anonymous pundit so well put it…
The very real problems now confronting the world – most of which were created by politically motivated politicos trying to solve real and manufactured problems for favored constituents – have now reached the point where they can only be solved by lowering the burden of government on entrepreneurs and letting the free market do what it does best. The countries that are first to jump on this bandwagon, or that are most vigorous in shedding their layers of obstructionist regulations and taxation, are going to be those that win the day. Conversely, any country that stubbornly tries to hold on to the statist quo is headed for even more serious troubles as its productive elements ship off to more favorable turf. Investment angle? Watch the news for signals indicating that a particular government is turning toward freer markets, smaller governments, and lower taxes – then pile in. Getting in early on such a turnaround could be hugely profitable, just as leaving money tied up in the markets overburdened by stubborn statists is a sure ticket to a big loss. Buying Gold today…?
|
| Money Creation and Price Inflation Cause Justified Paranoia Posted: 10 Nov 2010 08:29 AM PST I have to admit that I am getting so jaded by the horrific monetary and fiscal insanities of the Federal Reserve and the Congress that new horrific fiscal and monetary insanities seem to now sort of "bounce off" my numbed senses. I also seem to be more hypersensitive these days, which may or may not be associated with Mogambo Hysterical Syndrome (MHS), a tragic condition where the sufferer of MHS has the terrifying mental stress of carrying foretold knowledge of the certain economic doom of price inflation as a result of the creation of too much money, especially when used to fund the expansion of the welfare-and-government/bread-and-circuses state that the American economy has become. Sufferers of the tragedy of MHS, in case you were wondering, instinctively buy gold, silver, guns, good grub and build some kind of weird Mogambo Last Line Of Retreat (MLLOR) bunker out of, for example, sofa cushions, or perhaps steel-reinforced concrete bristling with surveillance gear and large-caliber weaponry. Parenthetically, bunkers of MLLOR class do not have cannons around my neighborhood, as it seems to be impossible to get a zoning variance to install an anti-aircraft cannon, even though I carefully explained to them, Occam's Razor-like, "Invisible helicopters and flying saucers from outer space invading the Earth are not going to shoot themselves down, you morons!" But after a while you get a kind of "permanent stunned" feeling, like hearing my family telling me, for the thousandth time, that "normal" husbands and fathers do not have nightmares about devouring inflation in prices that will be caused by the Federal Reserve creating so, so many new dollars, particularly so that the insane Obama administration can deficit-spend us into a Devouring Hellhole Of Un-Payable Debt (DHOUPD) to support a gigantic welfare-state that is spending half of GDP! And I am absolutely sick of hearing how "normal husbands and fathers" are not forcing their families to skimp and scrape, hoarding every dime like Scrooge-like misers so that I can feverishly invest as much money as I possibly, possibly can into gold, silver and oil as fearful protection against the foul Federal Reserve creating so much new money that terrifying inflation in prices is, as we professionals say in official economics jargon, Guaran-Freaking-Teed (GFT). Now, however, their unkind words bounce off of me, and I sit around a lot, watching TV in a kind of catatonic stupefaction and in my underwear so that the kids will be too grossed-out to stay in the same room with me. But suddenly, alone and benumbed as I am, something stirs inside me at the scary fact that the Gross Domestic Product Deflator for the 3rd quarter came out as 2.3%, which is inflation of 2.3%, which is up from the 1.9% of the 2nd quarter! The cynical, hysterical pessimist in me immediately computes the percentage change, and finds that the rate of inflation increased by 21% in one quarter! Gaaahhh! Of course, the screaming in fear aside, the statistic is virtually meaningless, but not completely, as it is obviously indicative of trend, and by the way that my heart is pounding, pounding, pounding at rising inflation we also know that a 2.3% GDP deflator is a lot in an economy that has its GDP growing at only 2%! Gaaahhh! In short, prices are rising faster than the economy is growing, a horror hinted at by the second use of "Gaaahhh!" a word used to indicate a blood-curdling scream of horror. And it is by this that you can identify the people who do NOT own gold, silver and oil, as they are the ones saying "Gaaahhh! We're Freaking Doomed (WFD)!" And it is also by this that you can identify the people who DO own gold, silver and oil, as they are ones saying, "Whee! This investing stuff is easy!" The Mogambo Guru Money Creation and Price Inflation Cause Justified Paranoia 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."
|
| US Mint Sales: Silver Eagle Coins Top 29M, Silver Proof Sets Dip Slightly Posted: 10 Nov 2010 08:29 AM PST Sales for 2010 Silver Proof Sets gently tapered, while scorching hot silver bullion demand lit up again. In all, the United States Mint weekly sales report revealed a shining recovery for all but one, aforementioned, silver product.
|
| Featured Coin News and Articles for November 7-13 Posted: 10 Nov 2010 08:29 AM PST What's New This Week………. Greg Reynolds writes on Stack's auction of the W.L. Carson collection proof coins. "The current topic is the W. L. Carson collection, which features Proof U.S. coins. It was auctioned by Stack's in Baltimore last week."
Jim Wells from the California Numismatist writes on the "Crime of 1873″ and its impact on numismatic history. Quarter-dollar coins honoring Mount Hood National Forest in Oregon will enter into circulation on November 15. At noon Eastern Time (ET) the same day, the United States Mint will begin accepting orders for collectible bags and two-roll sets containing the new coin. Legend Numismatics gives a market report for the Baltimore Coin Show. "Yeah, this is broken record: Mary Counts, David Chrenshaw, Lori Hamrick and team did it again. They put on one of the BEST shows."
Gainesville Coins writes on the rationing of American gold and silver eagle bullion. "This September after more than two years, the United States Mint lifted the rationing of American Gold and Silver Eagle bullion coins." NEW & UPDATED – Our coverage of rare coin and currency news has expanded with Austin Purvis taking over as Editor of Coin News Daily. This is a special section of CoinLink where we scour the web for items of interest related to numismatics and post a short excerpt and link to these "off site" resources. We have also made changes to The Bullion Report with daily news and article updates, and a monthly analysis of the "Premiums Over Spot" for Gold and Silver Bullion products. View all the latest rare coin news here
|
| Coin History: “Crime of 1873″ Creates Coinage Chaos Posted: 10 Nov 2010 08:28 AM PST By Jim Wells – The California Numismatist America's coinage has undergone many changes in over two centuries, with frequent modifications to denominations, varieties, metals, and designs. Perhaps the most activity occurred in 1873. After three years of deliberation, the U. S. Congress passed a comprehensive Coinage Act that was signed by President Grant on February 12, 1873. The Act was an effort to reform and consolidate the coinage system. It embraced the gold standard and demonetized silver, fueling the competition between the powerful mining interests. But its results, intended and unintended, caused the Coinage Act to be called the "Crime of 1873."
As a partial result of the legislation, the year 1873 saw the minting of 20 different coin designs in 13 denominations. Struggles grew between the backers of gold, silver, and nickel coinage. Gold was the winner, so was nickel. Silver lost. New designs were created at the three U.S. Mints when arrows were placed beside the date on three silver denominations to indicate a weight change. Four coin designs were dropped, and a new coin type added. Nine coin designs continued without major change. A dozen coin designs also sport both an "Open 3" and "Close 3" in the date, yielding more varieties. A busy year! Of course collectors may not consider the results as a "crime," but as a bonanza and a collection challenge. A one-year set of 1873 coins is still a worthy goal for many. In 1873, Ulysses Grant was beginning his second term as President. The country's continuing push for "Manifest Destiny" led pioneers across the West to populate the entire continent. The California gold rush was into the third decade of providing material for gold coinage. A new Mint building we now call the "Granite Lady" was about to open in San Francisco, which would make it the world's largest mint at the time. The three-year-old Carson City Mint was producing gold and silver from Nevada's Comstock Lode. And that year's Coinage Act created chaos and confusion, even contributing to a national depression. The Coinage Act of 1873: Good Intentions, Mixed Results By the late 1860s, the U.S. coinage system was an illogical mix of denominations, designs, and types. The Mint was producing three-cent pieces in both silver and nickel, five-cent coins in the same two metals, and dollars in two metals: silver and gold. Some versions had clearly become superfluous. As the Government reviewed their coinage system, they concluded that the basic monetary law of 1837, as amended several times, was no longer adequate to serve the nation's needs. The U.S. coinage laws needed streamlining and strengthening, and a proposal was drafted. The result was a lengthy bill, with mixed consequences. When the Act of 1873 was passed, few considered it a "crime." The term didn't arise until several years later. Then the silver miners and their powerful friends in Washington, disgruntled by a decline in silver coin production, blamed the Act for all their troubles, mainly because it had abolished silver dollars. Three Weights Changed to "Metric"
By the time the Act took effect, the Mint had already produced significant numbers of 1873 silver coins at the old weights. Officials decided to place distinctive arrows alongside the date on the new, slightly heavier coins. The Mint had used the same device in 1853 to denote a slight reduction in weight. This time, the arrows appeared for only two years and were dropped without comment at the end of 1874. Four Designs Dropped Four coin designs were eliminated by the Act of 1873, the most ever dropped in any one year. The Act omitted the two cent denomination, introduced in 1864 because of the coin shortages caused by the Civil War. Mintages dwindled after the war when fewer citizens and banks called for the denomination. No protests were heard. Also deleted were two silver coins being minted in parallel with nickel equivalents. Silver three cent coins had been minted along with nickel three cents since 1865, and in the final years many circulation issues were melted. The silver half dime had a similar counterpart: the nickel five-cent piece. Industrialist Joseph Wharton had been promoting nickel for coinage for decades; not surprisingly his empire monopolized nickel production. The writers of the Act of 1873 met his desires by continuing the nickel 3¢ and 5¢ versions instead of the silver ones. Perhaps the biggest uproar was caused by the abolishment of the silver dollar. The silver dollar, like the silver three cent and half dime, competed with another similar-denomination coin: the gold dollar. Although silver dollars were the foundation of our monetary system, they did not comprise even 1% of circulating silver. The silver discoveries at the Comstock Lode and other mines had lowered the metal's market value in relation to gold.
Something New: Trade Dollars The mining interests did get a compromise: the trade dollar. The silver lobby hoped it would provide an outlet for silver, and open trade with the Far East in competition with Spanish and Mexican dollars. The 1873 Act authorized trade dollars at a greater weight— 420 grains—versus the standard dollar's 412.5 grains. Nearly the entire 1873 mintage went to China, where it was considered better than pesos, and widely chop marked in approval. To benefit the silver lobby, the 1873 Act gave trade dollars domestic legal-tender status up to $5. When silver prices fell in 1876, this status was revoked. Values fell further, and abuses and misuses mounted. Mintages for circulation lasted until 1878, but proofs of the controversial coin were made through 1883. Walter Breen delicately called the Trade dollar "an expensive mistake—its motivation mere greed, its design a triumph of dullness, its domestic circulation and legal-tender status a disastrous provision of law leading only to ghastly abuses … its recall a long overdue but very mixed blessing, and its collection a source of decades of frustration." Did he dislike it? Nine Designs Unchanged Coins that were continued by the Act of 1873 included the nickel three cent and five cent pieces, which had survived over their silver counterparts, and the Indian Head cent. Retained also in the 1873 Act were all six denominations of gold coins. The Act had effectively placed the United States on the gold standard, in practice, if not in law. The U.S. did not officially adopt the gold standard until 1900, following years of debate. The 1896 and 1900 presidential elections focused on silver and gold, with victory going both times to the champion of gold, William McKinley. The debates are best remembered by the famous 'cross of gold' speech by William Jennings Bryan, the Democratic presidential nominee at the 1896 Democratic National Convention. In his impassioned plea for bimetallism, he expressed his hope, "You shall not crucify mankind upon a cross of gold."
To add more flavors to an already rich coinage year, varieties in the 1873 date itself were created purposefully by the Mint. Dies had been made in late 1872 for all 1873 coins. But Chief Coiner Archibald Loudon Snowden complained that the final 3 digit in the date (now called the Close 3 or erroneously "Closed 3") could easily be mistaken for an 8. Mint engravers under William Barber prepared new dies with a different (Open) 3 for all coins. The three new designs "with arrows" all received the Open 3 design. But the old dies were used to produce many Close 3 products, and in the end twelve coin designs struck at Philadelphia and two from San Francisco have In general, the newer Open 3 is more common than the Close 3 variety; the half dollar is a notable exception. Did the Mint know what effect this would have on future collectors? "The Act" is Called "The Crime" and Leads to "The Panic" The Coinage Act of 1873 changed the United States policy with respect to silver. Before the Act, the United States had backed its currency with both gold and silver, and it minted both types of coins. The Act moved the United States to a "de facto" gold standard. The Act had the immediate effect of depressing silver prices. This hurt Western mining interests, who labeled the Act "The Crime of 1873." The coinage law also reduced the domestic money supply, which hurt farmers and anyone else who carried heavy debt loads. The resulting outcry raised serious questions about how long the new policy would last. This perception of instability in United States monetary policy caused investors to shy away from long-term obligations, particularly long-term bonds. In late 1873, the American economy entered a crisis. This followed a period of economic overexpansion that arose from an extended railroad boom. It came at the end of a series of economic setbacks that had started with the Black Friday panic of 1869, when Jay Gould tried to corner the gold market. In September 1873, a major cornerstone of the U.S. banking establishment declared bankruptcy, setting off a chain reaction of bank failures and temporarily closing the New York stock market. Layoffs and depression followed, and panic was felt across the nation. This "Panic of 1873" led to business failures and labor tensions, leading to the Long Depression. See what a few changes to the coinage system can wreak? The Result: an Array of 55 Varieties The coinage output of 1873, summarized in the table on the adjacent page, included 17 different designs, plus three more varieties with arrows at date. The Open 3 and Close 3 varieties add 12 more to the list. If a collector wants a coin from each mint and Open/Close combination, 23 more are needed, for a total of 55 coins. But extensive melting of some issues at the branch mints render several issues unique, rare, or unknown to exist. All of this coinage chaos—criminal or not—left 1873 as one of the most colorful years in American numismatics. Sources: Bowers, Q. David. The Expert's Guide to Collecting & Investing in Rare Coins. Whitman Publishing, Atlanta, 2006. Breen, Walter. Water Breen's Complete Encyclopedia of U.S. and Colonial Coins. Doubleday, New York. 1988. Sumner, William Graham. The Crime The History of United States Coins. Yeoman, R. S. (edited by Kenneth Related posts:
|
| Gold Seeker Closing Report: Gold and Silver Fall Almost 1% and 6% Posted: 10 Nov 2010 08:15 AM PST Gold fell all the way to $1383.05 in afterhours access trade yesterday before it rebounded in Asia to as high as $1410.10 around 4AM EST and then fell all the way back to $1383.65 in late morning New York trade, but it then rallied back higher in the last couple of hours of trade and ended with a loss of just 0.7%. Silver dropped to $26.435 in afterhours access trade yesterday before it climbed back to $28.185 in Asia, but it then fell back off for most of the rest of trade and ended with a loss of 5.9%.
|
| Gonzalo Lira And The Boiling Frog: Effects Of QE2 On The Bottom 80% Of The U.S. Population Posted: 10 Nov 2010 08:14 AM PST
Submitted by Gonzalo Lira The Boiling Frog: Effects of QE2 On The Bottom 80% of the U.S. Population
I’ve been arguing that the unpayable Federal government debt, coupled with irresponsible Federal Reserve policies, will inevitably lead to a hyperinflationary event and currency collapse. In order to prepare for a web seminar on hyperinflation in America, I’ve been looking at the issue of how to safeguard assets before a currency collapse, and how to identify opportunities in the midst of a hyperinflationary crisis.
Data, from Bureau of Labor Statistics, can be found here. (A note on the data: Housing expenditures include mortgage payments or rents, utilities, and heating, including heating oil. Transportation data includes use of public transportation. Food includes “Food Away From Home”—a remarkably high proportion of expenditures, at 41% for the entire population, skewering to almost 50% for the top quintile, and almost 30% for the lowest quintile. The figure “% of Annual Expenditures” represents how much food, housing, clothing and transportation—the basic necessities—represents of the total expenditures of each quintile. The figure “% of Income” shows the basic necessities as percentages of after-tax income for each quintile.) All the while, since the Consumer Price Index will be lagging or flat, the mainstream economists and the Fed drones will keep up a steady chant of, “There is no inflation! There is no inflation!”—even as a majority of the population feels the squeeze of rising prices for the basic necessities. It’ll be a lot like a bunch of cooks, standing around the boiling pot, saying to the poor frog, “It’s only cold water! Don’t worry! It’s still cold! Trust us!”
|
| Market Commentary From Monty Guild Posted: 10 Nov 2010 08:11 AM PST View the original post at jsmineset.com... November 10, 2010 12:55 PM Dear CIGAs, Global Markets Up, Up, And Away The world markets moved like Superman last week. They lifted off and moved higher in a decisive manner. In the ongoing contest between bulls and bears, the bulls have had the upper hand in many markets. Wall Street also moved firmly into the bullish camp with U.S. stocks eclipsing their April 2010 peaks. To us this means that the technical short-sellers who had been bearish on U.S. stocks and expecting a correction bought back their short positions and took their losses. Pullbacks will come, but the trend is up for: emerging markets in Asian and Latin American, commodities, including precious metals, base metals, oil, and foods. This upward trend can also be seen in the strong Asian currencies and for U.S. stocks. The trends are up for 3 reasons: [*]The U.S. Fed and other central banks are creating money. [*]The weak U.S. dollar i...
|
| Hourly Action In Gold From Trader Dan Posted: 10 Nov 2010 08:11 AM PST View the original post at jsmineset.com... November 10, 2010 11:22 AM Dear CIGAs, Two significant developments occurred in today's trading session which bear mentioning as both have important repercussions for the future. The first is the clear breakout above $87 in the crude oil market which is heralding a further rise in the cost of crude and with it, all of the liquid energies including gasoline and heating oil. The catalyst was a report showing a drawdown in the amount of crude in storage. Needless to say, this is not welcome news to cash strapped US consumers who are already feeling the affects of higher food costs. Now into this sordid mix comes higher energy costs. Food and energy – what are more essential than these? Nothing! The second is further downside follow through in the long bond after it breached an important chart support level in yesterday's trading session. There are so many false breakouts and breakdowns in today's markets on account of the algos that I am beco...
|
| Arbitration claim will target Morgan, HSBC for silver market rigging Posted: 10 Nov 2010 08:10 AM PST 4p ET Wednesday, November 10, 2010 Dear Friend of GATA and Gold (and Silver): GATA has received the notice below from New York lawyer John Lawrence Allen about an arbitration claim to be made against J.P. Morgan Chase and HSBC Bank over silver market manipulation. It may be another way for silver futures buyers to gain satisfaction, though GATA doesn't specifically endorse any particular legal action in this regard. CHRIS POWELL, Secretary/Treasurer * * * Announcement from the Law Office of John Lawrence Allen The Law Office of John Lawrence Allen is preparing to file an arbitration claim before the National Futures Association (NFA) against J.P. Morgan Chase & Co. and HSBC for silver market manipulation, fraud, and conspiracy to violate Section 22(a)(1) of the U.S. Commodity Exchange Act. We believe that a consolidated arbitration before the NFA is significantly superior to filing a traditional lawsuit in court for several reasons. First, arbitration is substantially less costly and more efficient than a suit in court. Generally an arbitration claim can be resolved within 12 to 15 months from filing as opposed to the years involved in a court proceeding. There is no right to appeal an arbitration claim, whereas in court, even if the case is won, it can be tied up in the appeal process for years. Second, arbitration is an equitable proceeding guided by equitable principles, whereas a court case is a legal proceeding guided by strict legal principles of proof. Third, arbiters are generally business people who understand what is fair and equitable as opposed to lay jury members who can be easily swayed by conflicting expert testimony. Finally, as there is no right to the formal appeal process, if the case is won, investors can expect to receive payment within a short time following the conclusion of the arbitration proceeding. Investors wishing to obtain information about joining the arbitration claim can visit investorbeware.org or call the Law Office of John Lawrence Allen at 1-800 345-1888. ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php
|
| Posted: 10 Nov 2010 07:56 AM PST Regardless of who's controlling the U.S. Congress, Sprott Asset Management Chief Investment Strategist John Embry holds out little hope for economic happiness in the short run. As he tells The Gold Report in this exclusive interview, "It's consequence time" and "any opportunity to have a pleasant outcome. . .in the relatively near term is long gone."
|
| Cliff Notes Of Hedgeye's Take On A Paul Krugman Lecture: A Good Charlatan Who Still Doesn't Get It Posted: 10 Nov 2010 07:49 AM PST
By Hedgeye Risk Management, submitted by fmxconnect.com Yesterday, I had the “pleasure” of attending a Paul Krugman lecture in one of my old classrooms at Yale and came away with a very different experience than the one I would have had as a wide-eyed undergraduate immersed in the dogma that is Yale econ theory. Also, I was really taken back by the fact that only Yale undergraduates were able to ask him questions; the older, more-informed members of the audience (roughly 50% of total attendees) were not allowed to partake in the discussion and ask challenging questions. Below, I’ve posted my “lecture notes” for your education/entertainment purposes: My takeaways on Professor Krugman are below:
Krugman’s key quotes and conclusions from the Q&A session:
In short, we continue to stand counter to the academic dogma that is associated with Quantitative Guessing being positive for the U.S. economy and the bullish hope that it will end well. We have expressed this conviction by being short U.S. equities (SPY) in our Virtual Portfolio. Further, we will continue to hold the U.S.’s economic and political leadership (or lack thereof) accountable each day. Conclusion: In attending a Paul Krugman lecture yesterday, we came away with two main takeaways: 1) the Perceived Wisdoms of academic dogma run rampant throughout U.S. monetary policy; and 2) Keynesians really don’t get it. Yours in Risk Management, Darius Dale Analyst
|
| Posted: 10 Nov 2010 07:39 AM PST
The California Legislative Analyst's Office has just released the latest fiscal outlook. It's not pretty. The state discloses a $25.4 billion budget "problem" which consists of a $6 billion deficit for the remainder of 2010-2011, and a $19 billion budget deficit forecasted for 2011-2012, thanks to a $8 billion plunge in revenues for the general fund, as temporary tax increases adopted in 2009 expire. Furthermore, as the state admits: "One major reason to stop passing the state’s problems to future Californians is that the state’s long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge. The costs of paying down these liabilities already are reflected, to some extent, in the state’s recurring deficits, but these costs will only grow in the future. By deferring hard decisions on how to finance routine annual budgets of state programs to future years, the state risks increasing further the already immense fiscal challenges facing tomorrow’s Californians." Luckily this is all rhetorical, and Cali will just take the Bernanke pill, and kick the can down the road. And as state budgets ultimately have to balance, at least on paper, one wonders if Cravath's ploy with its pro bono Harrisburg gimmick is merely to get Sacramento on a silver platter when the Chapter 9s move to the Golden State. One can be certain that one won't be pro bono. From the report, which in no way tries to hide the dire situation California finds itself in:
And the key question that California is asking itself, and which the Chairman should also be at least pondering. It is unfortunate that while the debate is at least open in California, Bernanke has decided on what the "right" course of action is:
The decision is pretty clear. Or maybe not: even California now believes it is better to bite the bullet now and take the medicine asap, no matter how painful the detox from cheap money will end up being:
|
| Pricking the Bubble in the Yen Posted: 10 Nov 2010 07:21 AM PST
Analysts have been puzzled by the relentless appreciation of the Japanese yen, which tickled ¥80.20 last week, and seems poised to break out to the ¥70 handle and an all time high. Having written the authoritative tome on the Japanese banking system 30 years ago (it’s in the Library of Congress), I can shed more than a little light on why. Unknown to most in the trading community, foreign banks have engaged in a massive recapitalization of their Japanese subsidiaries since over the last six months. Since May, excess foreign bank reserves held in yen have soared from $246 billion to $562 billion, an increase of a staggering $316 billion, creating immense upward pressure. Some $136 billion of this poured into the yen in September alone. By comparison, there are only $7.3 billion worth of net longs held in futures markets by speculators. Ask Japanese senior bankers why this is happening, and you get lame excuses, like anticipation of stiffer capital requirements from the Bank of Japan to head off any future financial crisis. The truth is that foreign banks are using their balance sheets to speculate in the currency markets and boost profits. Adding fuel to the fire has been efforts by the People’s Bank of China to diversify out of the dollar as a reserve asset by pouring new cash flows into the yen. This is showing up in a huge jump in overnight bill purchases by foreign investors. In days of old, countries used to destroy their neighbors by sending in invading armies of screaming warriors swinging great long swords. Today, you simply buy their currency; drive it to ridiculous heights, making its industry hopelessly uncompetitive in the global market place, thus collapsing its economy. This is what China is doing to Japan today. This explains why the central bank’s intervention efforts to slow the yen’s appreciation have been an abject failure. In September, total BOJ sales of yen amounted to only $61 billion, and has been spread among a range of lower tier assets, like “BBB” rated corporate bonds, exchange traded funds (ETF’s), and REIT’s. The Japanese government is slumming with its own version of QEII. But the amounts so far are miniscule compared to the inflows. They might as well be pissing in the ocean. There are two ways this kabuki play will end. The obvious one is for the BOJ to boost its intervention to the $1 trillion that worked the last time it was in this pickle eight years ago. I sense that a Pearl Harbor type surprise attack of this sort is setting up. Suck the shorts in with a series of small, ineffective interventions that invite laughter and derision, and then all of a sudden, its tora, tora, tora and bombs away. The shorts get taken to the cleaners. The second approach will be more subtle. Banks are currently earning 10 basis points on their excess reserves. Turn this number negative, as Germany and Switzerland did, and the banks will bail on their excess reserves in a heartbeat. It’s not a matter of if, but when they do this. Then the 15 year double top chartists have been waiting for will be in place, and one of the great shorts of the decade, and the (FXY) and the (YCS) will be in play. This all may happen very fast, so keep you finger poised over that mouse.
|
| BioTime Cracks the DNA Cell Command Code Posted: 10 Nov 2010 07:00 AM PST I apologize for the headline. As a writer, I know it's too long. It breaks all the rules of style and aesthetics. Some things, however, are more important than aesthetics – such as life-saving fortune-creating science. I am honestly staggered by the advances being made by science in this field. There are times that I seriously regret having put myself into the position that I can't invest personally in the companies I recommend to my Breakthrough Technology Alert subscribers. When I agreed to launch that publication, I had no idea how quickly regenerative science technologies would begin to accelerate. I know that financial newsletter writers use exaggeration and exclamation points the way McDonald's slings beef and buns, but I'm not kidding. So much has happened. There has been so much good news of late that my challenge is only to sort out what to tell you first. So, today, I'm going to tell you about one of the most recent developments. BioTime's (AMEX:BTX) new program to identify the gene transcription factors that control cells (please note, BioTime now trades under the new ticker symbol BTX). This is power that goes far beyond alchemists' dreams of transmutation. Turning lead into gold is nothing compared to the ability to turn adult skin cells into youthful angioblasts, hemangioblasts and other repair cells. These cells will rejuvenate your entire cardiovascular system and restore it to complete youthful status. What Dr. Michael West of BioTime is now learning to do reminds me of the mythical life-extending Philosopher's Stone of alchemical lore – but it is not myth. BioTime has confirmed, yet again, that it is the undisputed leader in regenerative medicine and cell biology. As I've told you before, Dr. West recently documented, with the help of other scientists, that he can take an aged skin cell on the verge of dying, and turn it into a perfect youthful induced pluripotent stem cell identical in every aspect to an embryonic stem cell. So, having demonstrated that he can change cell types with transcription factors, West set out to map the totality of human cell development – which he calls the embryome. The embryome is the genome's programming code and is of greater scientific importance. He began with the ACTCellerate program, funded in large part by the California Institute for Regenerative medicine. He allowed stem cells to develop, charting the changes and the factors that cause them. At each step, he was able to produce new purified cell types, which are of enormous value and importance to research scientists. ACTCellerate has produced hundreds of cell types. 140 are being sold by BioTime. On October 22, however, he announced 12 new stem cell lines at the GTBio conference. The real news for those paying attention was not, however, this marginal increase in cell type inventory. It was the way he derived them. Dr. West and the BioTime scientists have been performing complex experiments, applying transcription factors to both embryonic and iPS cells. As he cracks the code of cellular fate, the code of life itself, he applies for the patents on the methods – which have long been honored by the courts. Eventually, by the way, only iPS cells will be used in regenerative medicine. It is important at this point in the research, however, to make sure that iPS cells behave the same as embryonic stem cells. I personally think it is important to realize that iPS technology is in the process of making embryonic stem cells completely obsolete. To accomplish this task, however, a small number of embryonic cell lines are being used as controls. Dr. West calls this new phase in the cracking of embryome ACTCellerate 2 or PureStem. Already, BioTime has 12 new cell lines, created using transcription factors, for sale. In his presentation here, he goes through the process of creating pituitary lines. As I said, patents are being applied for. Thousands of other cell types will eventually be added to this IP library. In the process, medicine will be utterly and permanently transformed. In a rational world, we would be having parades over this breakthrough. I'll tell you why. In between the complexity of creating muscle cells with MYOD1 and iPS cells with four transcription factors is every other cell type in your body and probably many, many new ones. Among those that we know are on West's roadmap are the cells that will rejuvenate your cardiovascular and immune systems to youthful strength. How would you like the cardiovascular and immune system vigor of an adolescent? If you said no, I'd guess you were not that old anyway. Proof of principle, incidentally, has already been demonstrated in animal experiments. These therapies may be as simple as giving blood to a Biotime clinic and coming back for a transfusion in a few days. It's almost certainly that simple when it comes to heart and artery rejuvenation. A multitude of other therapies will also become available due to BioTime's PureStem research. One that I'm particularly looking forward to is a simple injectable cell cure for lactose intolerance. The day when I can once again eat Parmigiano Reggiano and Brie without concern will be a true day of celebration. Improved eyesight, muscle tone and reflexes will be nice too. Maybe some more hair too. The really important thing about the cardiovascular and immune system rejuvenation, however, is that these procedures will extend healthy lifespans for the majority of the population significantly. There's still a ways to go, to be sure, but we can at least see the finish line. In closing, let me return to my oft-used analogy of investing during the Great Depression. Visionary investors who believed in the emerging technologies of electronics, radio and home refrigeration did well even during the downturn. Eventually, they earned fortunes. Regards, Patrick Cox BioTime Cracks the DNA Cell Command Code 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."
|
| Ben Bernanke: The Chauncey Gardiner of Central Banking Posted: 10 Nov 2010 07:00 AM PST "[H]igher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes." -Federal Reserve Chairman Ben S. Bernanke, Washington Post, November 4, 2010 In Ben Bernanke's Washington Post elucidation of Fed policy, "What the Fed Did and Why: Supporting the Recovery and Sustaining Price Stability," the Fed chairman cut-and-pasted misleading paragraphs from earlier misleading speeches. He did not discuss the two most important aspects of his money experiment. Bernanke did not address, first, the real economy or, second, the rest of the world. It will be the first of these lapses that will be discussed below. On November 3, 2010, the Federal Open Market Committee's [FOMC] decided to buy $600 billion in bonds. The exchange works as follows: $600 billion of cash will be dispensed to the banking system by the Fed and $600 billion of U.S. Treasury bonds will be extracted. The Fed will also reinvest over $400 billion of maturing mortgage securities it bought earlier and buy Treasuries. The total purchases of over $1 trillion will satisfy, to some degree, the Federal Reserve's unstated but sine qua non obligation to fund the Treasury Department's deficit. This package is known as QE2: quantitative easing, second round. The first round was initiated in March of 2009. On March 18, 2009, the Fed announced it would buy $750 billion of mortgage-backed bonds, $100 billion of Fannie Mae and Freddie Mac securities, and $300 billion of long-term Treasury securities. To herald the New Era in central banking, Chairman Bernanke appeared on "60 Minutes." His March 15, 2009, TV appearance was introduced with fanfare: "You've never seen an interview with Ben Bernanke… By tradition, Federal Reserve Chairmen do not do interviews. That is, until now." On the show, Chairman Bernanke forecast that "green shoots [will] appear in different markets." INTERVIEWER: "Do you see green shoots?" Chairman BERNANKE: "I do. I do see green shoots." Do you see green shoots?," became the question on CNBC that every guest was asked. Most saw green shoots, some were looking for them, and others thought the question was childish, and probably did not receive another invitation to this carnival. Before embarking on QE2, one might suppose the FOMC studied the aftermath to QE1. In this regard, the central bankers were handed a treat. Bernanke's Domino Theory in the November 4, 2010, Washington Post is quoted above. The catalyst for recovery is "higher stock prices." The stock market has risen 75% since March 9, 2009. Bernanke could not have asked for a more boisterous number to plug into his equation. The result? Incomes have fallen. Employment is hard to find. In the Washington Post, the Fed chairman justified QE2 (as he had QE1) by stating the Fed's mandate "to promote a high level of employment." The official and understated unemployment rate was 8.1% when Bernanke was interviewed in March 2009. The official rate has risen to 9.6%. The "U-6″ level of unemployment has risen from 15.6% to 17.0% since March 2009. This number, calculated and released monthly by the Bureau of Labor Statistics, includes the unemployed plus those who are "discouraged" – people who have not looked for a job in the past four weeks because they think there are none – plus, those working part time because they cannot find a full-time job. The number of unemployed who have been without a job for 27 weeks or longer rose from 3.2 million in March 2009 to 6.2 million in October 2010. Nevertheless, Bernanke's central-planning unit will fix higher stock prices: Please note, in his Domino Theory, "higher stock prices" are not conditional. Bernanke's assumption should not be taken unconditionally to the market, since Bernanke's plan will fail, but it may produce a Garden of Eden before we drown in a Valley of Tears. An example of Bernanke's checkered record in market rigging is the Fed's failure to boost the housing market. The Fed has bought over $1 trillion of mortgage securities. According to the National Association of Realtors, the average existing home sales price in March 2009 was $170,000. This rose to $183,000 in June 2010, but has now fallen to $172,000. This much can be said of the Fed's mortgage effort: without it, house prices would be much lower. Another noteworthy feature of the Post article is Bernanke's narrow understanding of an economy. He described it as a "virtuous circle that will 'further support economic expansion.'" (Further expansion is false, but so was the entire article.) The virtuous circle will "lower mortgage rates" and "lower corporate bond rates" and prod "higher stock prices," according to Bernanke. This will "spur spending." He did not mention that personal consumption did rise in September 2010 (by 0.1%). Alas, this was achieved the old-fashioned way: Americans spent more than they earned. The chairman shows no signs of understanding there are many paths by which "increased spending will lead to higher incomes" and that he is navigating the worst one. (For the lower 99.9% of the American people that is, not for the Federal Reserve chairman.) That is the entire American economy according to the Fed chairman, the former college economist, who calls himself a macroeconomist. What "macro" means to the professor is uncertain, but the dictionary defines a macroeconomist as one who studies the economy "as a whole." It is surprising the P.R. division at the Fed did not tell the horticultural expert he should at least mention "Main Street," or the "real economy," two terms used to distinguish the rest of America from Wall Street and Washington. (Wall Street and Washington being one in the same.) In the Post, Bernanke's only solution to economic doldrums is to manipulate asset prices. He has spent the past 18 months distorting stock, bond, commodity, and currency markets. This is from a man who never spent a day off a university campus until he went to Washington. (From the "60 Minutes" interview: "I've never been on Wall Street.") Jobs and higher incomes are produced from profits. Bernanke never used the word "business" in his Post piece. He never mentioned "banks" or "banking" or "credit." Saving the banking system was (apparently) his crutch for pouring money into banks and regenerating their criminal culture. He is, after all, running the central bank, but his financial system, and his economy, has been reduced to stocks and bonds. Nevertheless, taking the world as it is and not as Simple Ben would have it, business and bank loans are part of the economy and QE1 had little influence on either. In his one, glancing reference to the job-creating world, the Fed chairman asserted: "Lower corporate bond rates [courtesy of the Fed's manipulations - editor's note] will encourage investment." Really? In its latest poll, the National Federation of Independent Business (NFIB), which represents small businesses, found that 52% of its members do not want a loan. That is a record high. Only 3% of NFIB members said getting a loan was a problem. Stephen Schwartzman, co-founder of Blackstone, the ubiquitous private-equity buyout firm, sees no point to QE2: "It's not an enormous incentive to do something different with your businesses because rates are down a few basis points. Money is already quite cheap." It is so cheap that Wall Street has leveraged itself to an estimated record $144 billion payout in 2010 bonuses, according to MSN News. Again, taking the world as it is and not as it should be, we are stuck with Simple Ben. He has announced QE2, restating the same ambitions as when he launched QE1. Albert Einstein has been quoted by several critics in reference to QE2: "The definition of insanity is doing the same thing over and over again and expecting different results." Bernanke's inability to do anything other than what he has done before resembles a fictional character with a narrow view of the world. Chauncey Gardiner (actually, Chance the gardener), was the mentally incapacitated gardener played by Peter Sellers in the screen version of Jerzy Kozinski's sagacious novel Being There. Chauncey, a man whose life was limited to gardening and watching TV, became, through a series of misapprehensions, the top adviser to officials in Washington, including the President: President "Bobby": Mr. Gardener, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives? [Long pause] Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden. President "Bobby": In the garden. Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again. President "Bobby": Spring and summer. Chance the Gardener: Yes. President "Bobby": Then fall and winter. Chance the Gardener: Yes. Benjamin Rand: I think what our insightful young friend is saying is that we welcome the inevitable seasons of nature, but we're upset by the seasons of our economy. Chance the Gardener: Yes! There will be growth in the spring! Benjamin Rand: Hmm! Chance the Gardener: Hmm! President "Bobby": Hmm. Well, Mr. Gardiner, I must admit that is one of the most refreshing and optimistic statements I've heard in a very, very long time. [Benjamin Rand applauds] President "Bobby": I admire your good, solid sense. That's precisely what we lack on Capitol Hill. President Bobby adopted Chance's optimistic advice in an address before the Financial Institute of America. His speech was the talk of the town. Television, even in that distant past (Being There was written in 1970), was on the spot, with its unfailing ability to trivialize any topic. The host of "This Evening," a fictional, national TV news show with 40 million viewers, asked Chauncey Gardiner to appear after the Vice President cancelled. Chauncey was asked for his opinion of the President's address, in which President Bobby "compared the economy of this country to a garden and indicated that after a period of decline a time of growth would naturally follow." Chauncey replied: "I do agree with the President: everything in it will grow strong in due course. And there is still plenty of room in it for new trees and new flowers of all kinds." At the end of Chauncey's appearance, the host embraced him center stage. The audience's "applause mounted to uproar." After his "green shoots" prophecy, Chairman Bernanke closed his "60 Minutes" performance. He offered Americans a sunlit future: "I think we will see recession coming to an end, probably this year [2009]. We'll see recovery beginning next year, and it will pick up steam, over time." In the wake of this rousing prediction from the Chauncey Gardner of Central Banking, Wall Street TV performers have talked the stock market up 75%. We are seeing new vistas of instability. 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.] Ben Bernanke: The Chauncey Gardiner of Central Banking 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 CME Increases Silver Margin Requirements Posted: 10 Nov 2010 06:23 AM PST "Sprott buys 15 million ounces of silver. China downgrades the USA again. 'Da Boyz' are back in town. Robert Zoellick now says he doesn't support a return to the gold standard. The Mogambo Guru speaks... and much more. " Yesterday in Gold and Silver Everything looked pretty normal when I checked in after I got up late on Tuesday morning. Gold wasn't up a lot, but it was well into positive territory. Silver was screaming to the upside once again. It looked like the shorts were on the run. But, when I checked the precious metal stocks, I was not at all impressed with the price action. The silver stocks were particularly moribund. I could tell that someone was selling shares into this rally. I immediately thought of the bad old days when a counter-intuitive stock move meant that the precious metals were about to get hammered. Then, at 1:05 p.m. Eastern time, the selling began in both metals. I'm not sure if it was 'da boyz'... or the big increase in ...
|
| The Coming Gold Standard... Is the Internet Anti-War? Posted: 10 Nov 2010 06:18 AM PST The Coming Gold Standard Wednesday, November 10, 2010 – by Staff Report Return to the Gold Standard would be madness ... I was, until recently, Economics Editor of The Telegraph, but these days I am at the Kennedy School of Government at Harvard, where I will blog occasionally when I'm not knee-deep in homework. If you so fancy, you can still find my book – 50 Economics Ideas You Really Need to Know – here ... I almost spat my coffee across the room when I saw the headline plastered across the front of the FT this morning: Robert Zoellick, president of the World Bank, is calling for a debate on the return to the Gold Standard, it said. Of course, when you read the column upon which the news story is based (subscription only, this being the FT), it is far less clear that Zoellick really wants a return to the 19th century international macro-economic structure. Instead, he merely seems to have name-checked gold as a possible mechanism to ...
|
| LGMR: Gold Finds "Bargain Buyers" in China, Silver Rallies After 10% Plunge Posted: 10 Nov 2010 06:07 AM PST London Gold Market Report from Adrian Ash BullionVault 09:45 ET, Fri 24 Sept. Gold Finds "Bargain Buyers" in China, Silver Rallies After 10% Plunge on US Margin-Hike "Clears Out Froth" THE PRICE OF GOLD AND SILVER recovered early in London on Wednesday following sharp overnight falls sparked by a 30% hike in the margin down-payments required for leveraged traders in US silver futures contracts. Major-economy government bonds slipped further after the Bank of England forecast above-target inflation throughout 2011, and losses on Irish government bonds pushed 10-year yields to a fresh post-Euro record of 8%. Commodity prices held flat. World stock markets extended Tuesday's drop on Wall Street, with the Shanghai index losing 0.7% after Chinese banks were ordered again to raise the ratio of depositors' money kept back in reserve. Last night's sharp fall in gold and silver prices marked the "clearing-out of intraday froth" reckons UBS strategist Edel Tully, who doesn't see...
|
| China Gold Demand To Likely Surpass India In 3-4 Years Posted: 10 Nov 2010 05:43 AM PST  China still has the gold bug. Here's an article confirming the widely held view that China is accumulating gold in a manner that does not upset the markets. It is buying from internal production (it's own mines), and it has been encouraging its people to buy gold. I call it the unspoken Chinese "get that gold within our borders and we'll figure it out later" gold policy. From Reuters: Analysis: Deregulation set to lift China gold demand (Reuters) - Plans to free up China's gold market are likely to boost imports of the precious metal to satisfy investor demand, putting the Middle Kingdom on course to eclipse India as the top global consumer in a few years. China, the world's largest consumer of base metals and the second biggest user of oil, is on gold bugs' radar screens, with any hint that Beijing may want to boost its gold holdings rippling through international markets, sending bullion higher. So far China's central bank has shied away from the international market and has instead been building reserves from its domestic mining industry, the largest in the world. But that may change after the People's Bank of China said in August it would let its banks export and import more gold in a program to drive the development of the country's market in the precious metal. By opening up the market, the PBOC may be able to draw tonnes of gold into China, which it could then pick up on the domestic market, without disrupting market equilibrium too much. "The way they will accumulate a massive amount of gold is by opening up imports and making sure there is heck a lot of gold swishing around in the domestic market," said Mark Pervan, a senior commodities analyst at ANZ. "It's just too big a player in the market. Investors are looking for any signs of China buying gold on the world market. If Beijing said it was buying 100 tonnes, prices would leap, not because of this 100 tonnes, but because of the 300 tonnes the market would expect to follow." ...China's gold consumption this year is forecast between 450 and 600 tonnes, with a consensus of 500 tonnes, analysts surveyed by Reuters said. The WGC estimates demand at 510 tonnes. Several researchers have urged Beijing to increase its gold reserves to diversify more of its $2.6 trillion in foreign currency reserves, and a more open market would allow the central government to build stocks of gold more quickly, without sending tremors through the international market. Although no detailed follow-up rules have been announced, analysts expect Beijing to open up the gold market as a prelude to deregulation of bond and foreign exchange markets. Full article HERE. 
|
Doug Winter writes on 
Vic Bozarth gives 
As part of the 1873 coinage overhaul, the weights of the dime, quarter, and half dollar were increased by 5% to simplify their value stated in grams. This was part of Congress' modest attempt to introduce the metric system into the nation's coinage, following the standard used by European countries. But Mint tolerances were broad enough on all denominations that old planchets satisfied the new standards. There was no way to distinguish new and old planchets, and the weight standardization, then as now, did not improve public support of the metric system.
In dropping silver dollars from the Mint's production lineup, the Act of 1873 seemed to declare that large silver coins were seeing little use in the nation's commerce. Initially, the silver interests didn't put up much resistance, because the law provided an alternate outlet for their bullion with the newly authorized trade dollar. As the decade wore on, huge supplies of earlier U.S. silver coins, hoarded during the war, returned to circulation from their hiding places abroad. This forced the Mint to curtail production of new silver coins. The drastic reduction in coinage coincided with a dramatic increase in silver-mining activity. The silver interests were squeezed, and they screamed—belatedly but loudly—that a "crime" had been committed at their expense. Their efforts eventually resulted in the Bland-Allison Act in 1878 and the return to bimetallism. The Treasury was required starting in 1878 to purchase large amounts of silver, and Morgan dollars began production in earnest.
More Changes! The Close 3 / Open 3 Debacle
An old metaphor: If you take a frog and drop it into a roiling pot of boiling water, it’ll jump right out, unscathed. But if you put that same frog in a pot of cold water, and then slowly raise the heat, that frog won’t move. It’ll stay in that pot of water, calm as can be, right up until it is boiled to death. 
| You are subscribed to email updates from Gold World News Flash To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment