Gold World News Flash

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• In the midst of Currency Confrontation, why are Gold and Silver falling?
• International Forecaster November 2010 (#6) - Gold, Silver, Economy + More
• The Fed Is Saying One Thing But Doing Something Very Different
• JPMorgan Private Bank On The "Quixotic" End To Europe's Latest (Failed) Grand Experiment
• The quiet fortitude of Silver
• In The News Today
• Max Pain For Options Trading On Dec 2010 Silver Futures
• US Mint Reports Soaring November Month-To-Date Silver Coin Sales
• If you're new to this whole ‘Crash JP Morgan Buy Silver' thing – watch this video (twice)
• RAT A TAT TAT TAT TAKE THAT JPM YOU FUCKER BANG BANG BANK CRASH CRASH CRASH – OMG YOU GOTTA WATCH THIS ONE!
• Bob Chapman – great radio interview on Silver margin rate increases, vulnerability of the banks with huge short-Silver postions and a whole lot more.
• December 7th (day of infamy?) bank run question
• Currency War heats up: “Let Scotiabank Help You Crash JP Morgan”
• I Try To Buy Lunch Using SILVER
• No words, no music, no graphics, no effects . . . PURE SILVER SPEAKS FOR ITSELF
• 2010 Proof Silver Eagle Coins Launch
• Gold’s Holding Pattern is a Golden Opportunity
• Price suppression coming undone, Turk tells King World News
• Weekly precious metals review at KWN has Haynes, Norcini, Arensberg
• Schiff interview with GATA's Douglas covers sale of imaginary gold
• Analysts Who Put the Bull in Bullish: Gold Outlook
• Gold Seeker Weekly Wrap-Up: Gold and Silver End Mixed on the Week
• COT Silver Report – November 19, 2010
• Why have gold and silver been falling in this time of monetary turmoil?
• Russia's Central Bank Buys 600,000 Ounces of Gold In October
• Congress Takes Vigorous Steps to Look Like it’s Planning to Reduce Deficit
• Is Ferdinand Pecora Rolling Over in His Grave?
• JPMorgan: Dollar to become the world's weakest currency
• Councilman Takes the Cake
• Global Financial System Crisis, Collapse in Consumer Spending, Unemployment, Rising Prices
• KWN Weekly Metals Wrap – Friendly Trends
• Growth vs. Value - The New Buggy Whip
• Schiff interview with GATA's Douglas covers sale of imaginary gold
• Are Expert Networks About To Be Exposed As The Ringleader In The Biggest Insider Trading Bust In History?
• Band-Aid Solutions
• While The U.S. Prints And Spends, Russia Loads The Boat With Gold...
• Guest Post: Currency Wars And The Fed’s Demise
• Target Zones for Buying Silver
• S&P 500, Treasuries, Gold, & Dollar are At Key Price Levels
• Higher Interest Rate Yields Impact on Gold, Metals and Other Commodities
• Gold Analyst Who Puts the Bull in Bullish
• Beginning of The Gold Plunge, or Just a Golden Breather?
• Buy Physical Silver And Gold Instead Of Suing Manipulators

In the midst of Currency Confrontation, why are Gold and Silver falling? Posted: 21 Nov 2010 01:00 PM PST In the last week, gold and silver prices fell even as George Soros himself commented that conditions for gold looked perfect. Why? A look around at virtually all markets from Shanghai through Europe and back to the States fell. The media pointed to the potential for interest rates to rise, but that is an insufficient explanation when one considers that the declines were in the region of 5% across all the board. An event that touched the very structure of the global financial system occurred and is still happening right now was, we believe, the cause of the falls.

International Forecaster November 2010 (#6) - Gold, Silver, Economy + More Posted: 21 Nov 2010 03:12 AM PST Something is going on that your government does not want you to know about. Very few journalists have written about it and little or nothing has appeared in the mainstream media. The story could be one of major stories of our time. Western powers have tried to destroy gold as a backing for currencies for many years. Presently the major media won't touch the story and that is understandable. Something we have been writing about for years is the Shanghai co-operation organization known as SCO. Few have been listening and few have been interested in what their mission is and what they have been up to.

The Fed Is Saying One Thing But Doing Something Very Different Posted: 20 Nov 2010 06:25 PM PST → Washington’s Blog Ben Bernanke has said that the Fed is trying to promote inflation, increase lending, reduce unemployment, and stimulate the economy. However, the Fed has arguably - to some extent - been working against all of these goals. For example, as I reported in March, the Fed has been paying the big banks high enough interest on the funds which they deposit at the Fed to discourage banks from making loans. Indeed, the Fed has explicitly stated that - in order to prevent inflation - it wants to ensure that the banks don't loan out money into the economy, but instead deposit it at the Fed: Why is M1 crashing? [the M1 money multiplier basically measures how much the money supply increases for each $1 increase in the monetary base, and it gives an indication of the "velocity" of money, i.e. how quickly money is circulating through the system]   Because the banks continue to build up their excess reserves, instead of lending out money:     (Click for full image)   These excess reserves, of course, are deposited at the Fed:     (Click for full image)   Why are banks building up their excess reserves?   As the Fed notes: The Federal Reserve Banks pay interest on required reserve balances--balances held at Reserve Banks to satisfy reserve requirements--and on excess balances--balances held in excess of required reserve balances and contractual clearing balances. The New York Fed itself said in a July 2009 staff report that the excess reserves are almost entirely due to Fed policy: Since September 2008, the quantity of reserves in the U.S. banking system has grown dramatically, as shown in Figure 1.1 Prior to the onset of the financial crisis, required reserves were about $40 billion and excess reserves were roughly $1.5 billion. Excess reserves spiked to around $9 billion in August 2007, but then quickly returned to pre-crisis levels and remained there until the middle of September 2008. Following the collapse of Lehman Brothers, however, total reserves began to grow rapidly, climbing above $900 billion by January 2009. As the figure shows, almost all of the increase was in excess reserves. While required reserves rose from $44 billion to $60 billion over this period, this change was dwarfed by the large and unprecedented rise in excess reserves. [Figure 1 is here] Why are banks holding so many excess reserves? What do the data in Figure 1 tell us about current economic conditions and about bank lending behavior? Some observers claim that the large increase in excess reserves implies that many of the policies introduced by the Federal Reserve in response to the financial crisis have been ineffective. Rather than promoting the flow of credit to firms and households, it is argued, the data shown in Figure 1 indicate that the money lent to banks and other intermediaries by the Federal Reserve since September 2008 is simply sitting idle in banks’ reserve accounts. Edlin and Jaffee (2009), for example, identify the high level of excess reserves as either the “problem” behind the continuing credit crunch or “if not the problem, one heckuva symptom” (p.2). Commentators have asked why banks are choosing to hold so many reserves instead of lending them out, and some claim that inducing banks to lend their excess reserves is crucial for resolving the credit crisis. This view has lead to proposals aimed at discouraging banks from holding excess reserves, such as placing a tax on excess reserves (Sumner, 2009) or setting a cap on the amount of excess reserves each bank is allowed to hold (Dasgupta, 2009). Mankiw (2009) discusses historical concerns about people hoarding money during times of financial stress and mentions proposals that were made to tax money holdings in order to encourage lending. He relates these historical episodes to the current situation by noting that “[w]ith banks now holding substantial excess reserves, [this historical] concern about cash hoarding suddenly seems very modern.” [In fact, however,] the total level of reserves in the banking system is determined almost entirely by the actions of the central bank and is not affected by private banks’ lending decisions. The liquidity facilities introduced by the Federal Reserve in response to the crisis have created a large quantity of reserves. While changes in bank lending behavior may lead to small changes in the level of required reserves, the vast majority of the newly-created reserves will end up being held as excess reserves almost no matter how banks react. In other words, the quantity of excess reserves depicted in Figure 1 reflects the size of the Federal Reserve’s policy initiatives, but says little or nothing about their effects on bank lending or on the economy more broadly. This conclusion may seem strange, at first glance, to readers familiar with textbook presentations of the money multiplier. Why Is The Fed Locking Up Excess Reserves? Why is the Fed locking up excess reserves? As Fed Vice Chairman Donald Kohn said in a speech on April 18, 2009: We are paying interest on excess reserves, which we can use to help provide a floor for the federal funds rate, as it does for other central banks, even if declines in lending or open market operations are not sufficient to bring reserves down to the desired level. Kohn said in a speech on January 3, 2010: Because we can now pay interest on excess reserves, we can raise short-term interest rates even with an extraordinarily large volume of reserves in the banking system. Increasing the rate we offer to banks on deposits at the Federal Reserve will put upward pressure on all short-term interest rates. As the Minneapolis Fed's research consultant, V. V. Chari, wrote this month: Currently, U.S. banks hold more than $1.1 trillion of reserves with the Federal Reserve System. To restrict excessive flow of reserves back into the economy, the Fed could increase the interest rate it pays on these reserves. Doing so would not only discourage banks from draining their reserve holdings, but would also exert upward pressure on broader market interest rates, since only rates higher than the overnight reserve rate would attract bank funds. In addition, paying interest on reserves is supported by economic theory as a means of reducing monetary inefficiencies, a concept referred to as “the Friedman rule.” And the conclusion to the above-linked New York Fed article states: We also discussed the importance of paying interest on reserves when the level of excess reserves is unusually high, as the Federal Reserve began to do in October 2008. Paying interest on reserves allows a central bank to maintain its influence over market interest rates independent of the quantity of reserves created by its liquidity facilities. The central bank can then let the size of these facilities be determined by conditions in the financial sector, while setting its target for the short-term interest rate based on macroeconomic conditions. This ability to separate monetary policy from the quantity of bank reserves is particularly important during the recovery from a financial crisis. If inflationary pressures begin to appear while the liquidity facilities are still in use, the central bank can use its interest-on-reserves policy to raise interest rates without necessarily removing all of the reserves created by the facilities. As the NY Fed explains in more detail: The central bank paid interest on reserves to prevent the increase in reserves from driving market interest rates below the level it deemed appropriate given macroeconomic conditions. In such a situation, the absence of a money-multiplier effect should be neither surprising nor troubling. Is the large quantity of reserves inflationary? Some observers have expressed concern that the large quantity of reserves will lead to an increase in the inflation rate unless the Federal Reserve acts to remove them quickly once the economy begins to recover. Meltzer (2009), for example, worries that “the enormous increase in bank reserves — caused by the Fed’s purchases of bonds and mortgages — will surely bring on severe inflation if allowed to remain.” Feldstein (2009) expresses similar concern that “when the economy begins to recover, these reserves can be converted into new loans and faster money growth” that will eventually prove inflationary. Under a traditional operational framework, where the central bank influences interest rates and the level of economic activity by changing the quantity of reserves, this concern would be well justified. Now that the Federal Reserve is paying interest on reserves, however, matters are different. When the economy begins to recover, firms will have more profitable opportunities to invest, increasing their demands for bank loans. Consequently, banks will be presented with more lending opportunities that are profitable at the current level of interest rates. As banks lend more, new deposits will be created and the general level of economic activity will increase. Left unchecked, this growth in lending and economic activity may generate inflationary pressures. Under a traditional operating framework, where no interest is paid on reserves, the central bank must remove nearly all of the excess reserves from the banking system in order to arrest this process. Only by removing these excess reserves can the central bank limit banks’ willingness to lend to firms and households and cause short-term interest rates to rise. Paying interest on reserves breaks this link between the quantity of reserves and banks’ willingness to lend. By raising the interest rate paid on reserves, the central bank can increase market interest rates and slow the growth of bank lending and economic activity without changing the quantity of reserves. In other words, paying interest on reserves allows the central bank to follow a path for short-term interest rates that is independent of the level of reserves. By choosing this path appropriately, the central bank can guard against inflationary pressures even if financial conditions lead it to maintain a high level of excess reserves. This logic applies equally well when financial conditions are normal. A central bank may choose to maintain a high level of reserve balances in normal times because doing so offers some important advantages, particularly regarding the operation of the payments system. For example, when banks hold more reserves they tend to rely less on daylight credit from the central bank for payments purposes. They also tend to send payments earlier in the day, on average, which reduces the likelihood of a significant operational disruption or of gridlock in the payments system. To capture these benefits, a central bank may choose to create a high level of reserves as a part of its normal operations, again using the interest rate it pays on reserves to influence market interest rates. Because financial conditions are not "normal", it appears that preventing inflation seems to be the Fed's overriding purpose in creating conditions ensuring high levels of excess reserves. *** As Barron's notes: The multiplier's decline "corresponds so exactly to the expansion of the Fed's balance sheet," says Constance Hunter, economist at hedge-fund firm Galtere. "It hits at the core of the problem in a credit crisis. Until [the multiplier] expands, we can't get sustainable growth of credit, jobs, consumption, housing. When the multiplier starts to go back up toward 1.8, then we know the psychological logjam has begun to break." *** It's not just the Fed. The NY Fed report notes: Most central banks now pay interest on reserves. Robert D. Auerbach - an economist with the U.S. House of Representatives Financial Services Committee for eleven years, assisting with oversight of the Federal Reserve, and subsequently Professor of Public Affairs at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin - argues that the Fed should slowly reduce the interest paid on reserves so as to stimulate the economy. Last week, Auerbach wrote: The stimulative effects of QE2 may be small and the costs may be large. One of these costs will be the payment of billions of dollars by taxpayers to the banks which currently hold over 50 percent of the monetary base, over $1 trillion in reserves. The interest payments are an incentive for banks to hold reserves rather than make business loans. If market interest rates rise, the Federal Reserve may be required to increase these interest payments to prevent the huge amount of bank reserves from flooding the economy. They should follow a different policy that benefits taxpayers and increases the incentive of banks to make business loans as I have previously suggested. In September, Auerbach explained: Immediately after the recession took a dramatic dive in September 2008, the Bernanke Fed implemented a policy that continues to further damage the incentive for banks to lend to businesses. On October 6, 2008 the Fed's Board of Governors, chaired by Ben Bernanke, announced it would begin paying interest on the reserve balances of the nation's banks, major lenders to medium and small size businesses.   You don't need a Ph.D. economist to know that if you pay banks ¼ percent risk free interest to hold reserves that they can obtain at near zero interest, that would be an incentive to hold the reserves. The Fed pumped out huge amounts of money, with the base of the money supply more than doubling from August 2008 to August 2010, reaching $1.99 trillion. Guess who has over half of this money parked in cold storage? The banks have $1.085 trillion on reserves drawing interest, The Fed records show they were paid $2.18 billion interest on these reserves in 2009.   A number of people spoke about the disincentive for bank lending embedded in this policy including Chairman Bernanke.   ***   Jim McTague, Washington Editor of Barrons, wrote in his February 2, 2009 column, "Where's the Stimulus:" "Increasing the supply of credit might help pump up spending, too. University of Texas Professor Robert Auerbach an economist who studied under the late Milton Friedman, thinks he has the makings of a malpractice suit against Federal Reserve Chairman Ben Bernanke, as the Fed is holding a record number of reserves: $901 billion in January as opposed to $44 billion in September, when the Fed began paying interest on money commercial banks parked at the central bank. The banks prefer the sure rate of return they get by sitting in cash, not making loans. Fed, stop paying, he says."   Shortly after this article appeared Fed Chairman Bernanke explained: "Because banks should be unwilling to lend reserves at a rate lower than they can receive from the Fed, the interest rate the Fed pays on bank reserves should help to set a floor on the overnight interest rate." (National Press Club, February 18, 2009) That was an admission that the Fed's payment of interest on reserves did impair bank lending. Bernanke's rationale for interest payments on reserves included preventing banks from lending at lower interest rates. That is illogical at a time when the Fed's target interest rate for federal funds, the small market for interbank loans, was zero to a quarter of one percent. The banks would be unlikely to lend at negative rates of interest -- paying people to take their money -- even without the Fed paying the banks to hold reserves.   The next month William T. Gavin, an excellent economist at the St. Louis Federal Reserve, wrote in its March\April 2009 publication: "first, for the individual bank, the risk-free rate of ¼ percent must be the bank's perception of its best investment opportunity."   The Bernanke Fed's policy was a repetition of what the Fed did in 1936 and 1937 which helped drive the country into a second depression. Why does Chairman Bernanke, who has studied the Great Depression of the 1930's and has surely read the classic 1963 account of improper actions by the Fed on bank reserves described by Milton Friedman and Anna Schwartz, repeat the mistaken policy? As the economy pulled out of the deep recession in 1936 the Fed Board thought the U.S. banks had too much excess reserves, so they began to raise the reserves banks were required to hold. In three steps from August 1936 to May 1937 they doubled the reserve requirements for the large banks (13 percent to 26 percent of checkable deposits) and the country banks (7 percent to 14 percent of checkable deposits).   Friedman and Schwartz ask: "why seek to immobilize reserves at that time?" The economy went back into a deep depression. The Bernanke Fed's 2008 to 2010 policy also immobilizes the banking system's reserves reducing the banks' incentive to make loans.   This is a bad policy even if the banks approve. The correct policy now should be to slowly reduce the interest paid on bank reserves to zero and simultaneously maintain a moderate increase in the money supply by slowly raising the short term market interest rate targeted by the Fed. Keeping the short term target interest rate at zero causes many problems, not the least of which is allowing banks to borrow at a zero interest rate and sit on their reserves so they can receive billions in interest from the taxpayers via the Fed. Business loans from banks are vital to the nations' recovery. The fact that the Fed is suppressing lending and inflation at a time when it says it is trying to encourage both shows that the Fed is saying one thing and doing something else entirely. I have previously pointed out numerous other ways in which the

JPMorgan Private Bank On The "Quixotic" End To Europe's Latest (Failed) Grand Experiment Posted: 20 Nov 2010 03:04 PM PST One of the more persuasive analyses on the fate of the EMU that we have read recently, comes, oddly enough, from JP Morgan, although not from the firm "proper" but from its somewhat more iconoclastic Private Bank division (which manages portfolios for the ultrawealthy). At the core of the argument, which is far more subtle and nuanced than any report by Ambrose-Evans Pritchard, yet which reaches the same conclusion on the viability of the Eurozone, is the now accepted schism between the core and the periphery, in virtually every aspect of their economies: "how can the European Central Bank simultaneously maintain the “right” monetary policy for inflation-phobic Germany and the weak periphery at the same time?" What many don't know, however, is that this very dichotomy was the reason for the collapse of the first attempt at a monetary union in Europe, the European Exchange Rate Mechanism, which ended with a loud thug back in 1992, "when the UK needed a much weaker monetary policy than Germany, which was overheating in the wake of Unification stimulus." Of course, instead of taking no for an answer, Europe merely upped the ante and layered monetary unification on top of an artificial political and customs union. The current state of affairs is all Europe has to show for it. So what happens next? Just as Dylan Grice suggested on Friday that China may have realized that its inflationary endgame has now entered its "out of control" phase, so too perhaps Europe, now accepts the realization that the same unsuccessful outcome as 1992 is inevitable and the premise of a European Union can finally be shelved. Yet in a world in which, as JPM claims, the need for an artificial European union to preserve the peace ended in 1954, and the far more critical peace-perpetuation mechanism - global corporatocracy - is far more important, perhaps Europe should instead focus on doing all it can to promote the interests of various multinational corporations, whose viability may be far more important to Europe's continued non-wartime status. Or perhaps that is the idea all along - with corporate viability more reliant on a healthy banking sector than anything else, are Europe's taxpayers now expected to pay for the 50+ years of peace and social welfare they have received by rescuing the various banks whose bad investments would not sustain one day without an explicit and implicit sovereign backstop. Is Europe essentially saying that should Europe's banks be impaired, that war will certainly follow? Or if the message is not too clear yet, perhaps it will be made soon enough... From JPM Private Bank: A Don Quixote Thanksgiving The diverging economic conditions between Europe’s core and periphery are severe, but not insurmountable1. However, a flaw in Europe’s creation myth may lay at the heart of the inability of the European Monetary Union to survive over the long run. As Europe deals with its latest weak link (Ireland), I am reminded of Don Quixote, who among other things, went on a difficult journey for all the wrong reasons. For Europe, the EMU may turn out to be the same. First, the economics. The Periphery and Pompeii Peripheral Europe (Greece, Portugal, Ireland and Spain) is dealing with the aftermath of a consumption boom gone wrong. As we discussed in our “Sick Men of Europe” paper last February, a pattern of faster consumption, growing current account deficits and a loss of competitiveness began in the Periphery almost immediately following the adoption of the Euro. In the wake of the global recession, like Pompeii, growth in the Periphery is frozen in time while Core Europe has revived. One reason: home prices actually rose more relative to income in Spain and Ireland than they did in the US (see below). Recall as well that while banks grew to be 100% of GDP in the US, in Spain they grew to 200% of GDP, and in Ireland, 400% of GDP (that’s why GDP measures may not be the best barometer of event risk). Irish banks essentially became European banks in the broadest sense of the word. But who pays the freight if something goes wrong? More on that later. Another sign of Core Europe’s revival: Germany (15x the size of Ireland) is doing quite well, and represents a large part of the European equity holdings that we do have in portfolios (see post-script for more on European equities). As shown below, German unemployment is at a 20-year low, and there are increasing signs of labor shortages reported by German manufacturers. These are “good” problems to have at a time of low global growth, particularly across the developed world. But this is part of the problem: how can the European Central Bank simultaneously maintain the “right” monetary policy for inflation-phobic Germany and the weak periphery at the same time? This conundrum lay behind the collapse of the prior monetary union in Europe, the European Exchange Rate Mechanism. This effort collapsed in 1992, when the UK needed a much weaker monetary policy than Germany, which was overheating in the wake of Unification stimulus. As Maastricht orthodoxy is imposed on Greece and Ireland, we are reminded again of how infrequently belt-tightening has been attempted without an exchange rate devaluation to help cushion the blow. The chart above plots current fiscal adjustments in Europe (orange) compared to prior ones in Europe and Latin America (yellow). No one (other than Latvia) has tried this before: large fiscal adjustments in a low-growth, no-devaluation environment. In Ireland, austerity measures have simply led to lower growth, lower tax revenue and more austerity. Pursuing this course of action to repay foreign bondholders is causing political and social pressure (as well as 8% real interest rates) which we do not believe can be withstood in the long run. As things stand now, the Irish bank bailout may cost 8-10x more than its US equivalent (TARP). The “Irish Bailout” is more a bailout for Ireland’s lenders (European banks and the ECB) than for Ireland itself, as Irish taxpayers are stuck with the bill. Optimists concede problems in Ireland but point instead to improvements in Spain, which is 6x the size of Ireland. As shown, while Ireland has become more reliant on the ECB, market conditions for Spain improved after bank stress tests this summer, which allowed Spain to reduce its borrowing from the ECB. Improvements in Spanish credit markets unleashed an array of “Mission Accomplished” banners, mostly from strategist and economists that work at European banks. However, let’s not get too excited about Spain just yet. In a world of US Fed bond purchases and Asian currency intervention driving down rates, the desperate thirst for yield is helping Spain sell its debt, and is a natural market stabilizer of sorts. But…Spain’s Q3 GDP growth was zero; the service sector (60%-70% of the economy) has rolled over; car sales are down 40% to their lowest level in 20 years after the expiration of an incentive program which ran out in June; the improvement in Spain’s trade deficit reflects a massive, unhealthy collapse in imports (see EoTM 6-7-2010); and unemployment remains over 20%, possibly a reflection of Spain’s limited labor mobility, one of the lowest in Europe. One key thing to watch in Spain: the Achilles heel of the EMU, competitiveness gaps between countries. There are a lot of ways to measure this; below (left) we look at unit labor costs. While the difference between Spain and Germany is not rising anymore, the gap is still large. How big is this gap? For comparison’s sake, we show as well the widest labor cost differentials across US regions over the same time frame. While the Fed’s challenge is a large one, at least it is dealing with a more homogenous set of economic conditions. This is not “new news”: such problems were highlighted within Europe well before the recession hit. The German Institute of Economic Research2 looked at labor cost divergence in 2007, and was concerned about what they found: permanently higher rates of labor cost increases in Portugal, Greece and to a lesser extent, Italy; labor-cost differences that were much greater in Europe than across US states or German Lander; and a loss of competitiveness, such that countries might experience excessive investment in housing, lower productivity and higher structural unemployment. Their conclusion: “Prolonged boom-and-bust cycles as a result of divergences might actually endanger the political stability of the euro-area. A country which finds itself at the beginning of the bust leg of a business cycle amplified by the structure of EMU might find the idea of leaving monetary union increasingly attractive. Leaving the union would allow the country to depreciate sharply and forego the adjustment costs of relative wage deflation …..” As we noted in our Sick Man of Europe article, UK stocks rallied sharply in 1992 after they left the ERM and were able to engineer their own monetary policy. Flaws in the Creation Myth of Europe3 In the wake of the 1992 ERM collapse, why did Europe attempt another monetary union given large differences in language, labor mobility and productivity? It makes sense if seen as part of a broader effort to create a United Europe, both politically and economically. A few years ago, Swedish and Dutch politicians responsible for mobilizing support for the EU Constitution referred to “Yes” votes as necessary tribute to honor the dead from the Second World War, and more urgently, to avoid the pre-war divisions which led to it. Conflict between European empires existed for hundreds of years (1871-1914 was the only period of peace in European history until 1945), so the idea of a united Europe would have seemed appealing in 1945. However, conditions for securing a lasting peace within Western Europe were arguably already in place by 19544: The Soviet threat rendered any lingering grievances moot, as did the large presence of US and British troops Unlike reparations imposed on losers in the wake of WWI, vanquished countries received aid after WWII (Marshall Plan) By 1954, Germany had become a stable, liberal, democratic society, one of the most amazing transformations in history given what preceded it. Just ten years earlier, rather than surrender after Allied victories in Africa, Russia and Italy and the Normandy invasion, Germany kept on fighting, losing 1.8 mm soldiers in 1944 and another 1.6 mm in 1945 To summarize, Europe seems to be on a Quixotic quest for mechanisms to support a peace that had already been obtained by 1954, or shortly thereafter. As a result, the European creation myth of the 1990’s (“Europe must accept supranational political and economic structures to prevent future conflict”) may be flawed. Such a flaw, to the extent that Europeans no longer believe it, may explain a lot of things, from public referendums rejecting the EU constitution; to the lack of widespread support for regional transfers; and the reluctance of countries like Ireland to yield sovereignty over their fiscal affairs5. Taken to its logical conclusion, the European Monetary Union may continue to struggle under both the strain of its economic inconsistencies, and the weakness of its political roots. The author of the 1992 German Constitutional Court opinion on Maastricht described this issue in plain terms. The treaty… “…is not able to support its own premise: the common ground of a European Staatsvolk which belongs together: a minimum of homogeneity in basic constitutional attitudes, a legal language accessible to all, economic and cultural similarities or at least some forces of approximation, the possibility of political exchange through media, which reach the whole of Europe, a leadership known in Europe and parties active across Europe. A Europeanisation without a prior European consciousness and therefore without a European people with a  oncrete capability and readiness for common statehood would be, in terms of the history of thought, un-European.” Support amongst EU countries for EU membership is close to its lowest levels since the surveys began in 1973 (see chart). To be clear, this paper is about the durability of the current European Monetary Union and the risk of bondholder losses, not the viability of the EU as a political entity. But as support for the latter wanes, steps that need to be taken to support the former may be more difficult to achieve. The European Financial Stability Facility does suggest that Europe understands the need for fiscal transfers to get through this crisis. Ireland may now draw upon it, and its creators see it as a bridge to a more secure monetary union. It is designed to allow member countries to straighten out their finances, refrain from having to issue in the debt markets for 3 years, and then come back to the debt markets once they run Germanic fiscal policy, but with debt/GDP ratios well over 100% and stuck in a rut of low growth. It’s a great vision and makes total sense on paper. I think I see a windmill in the distance… Michael Cembalest Chief Investment Officer Postscript: on investments in Europe Ten-year Irish debt is currently pricing in an 80% probability of a default (55% for Spain). Some hedge funds and high yield funds we invest with may find value here, as a lot of bad news is priced in. However, our managed fixed income funds aim for steady income and capital preservation, so they generally do not hold much Ireland, Portugal, Spain or Greece debt. We have been investing in bank non-performing loans and distressed corporate debt in Europe, opportunities we expect to continue as the European banking system continues to shrink. Given the current reliance on the ECB, this process has a long way to go. On European equities, we have highlighted before the large degree of non-European revenue earned by European companies. That explains why European equities have over long  periods of time kept pace with other markets despite low nominal growth. This year and since January 2008, however, European equities have  trailed the S&P 500 in local currency terms (“European equities” include countries like the UK, Denmark and Sweden; EMU equities trailed the S&P by even more). Our European equity holdings have been tilted towards German mid-cap exporters, which have outperformed the rest of Europe and the US as well. In terms of valuation, European equities trade somewhere around 10-12x earnings, so like the peripheral European bond markets, there’s a lot of pessimism priced in. We have a regional equity preference for the U.S. and Asia in our portfolios at the current time, but it cannot be said that European equity markets are unaware of the challenges facing the EMU.   1 The regions of the United States, for example, experienced tremendously divergent economic conditions during the depressions of the 19th century and the Great Depression of the 20th. Throughout these periods, monetary and labor conditions converged and a system of fiscal transfers was put in place to endure them. In prior “Eye on the Market” notes, we covered the convergence of labor costs in the Northeast and Midwest from 1820 to 1900, and the fiscal transfers which took place from the Northeast to the Midwest during the Great Depression, when farm prices fell by 40%. 2 “Does the Dispersion of Unit Labor Cost Dynamics in the EMU Imply Long-run Divergence?”, Dullien and Fritsche, Deutsches Institut für Wirtschaftsforschung, Berlin, March 2007. 3 This section draws heavily on an article by Bernard Connolly, now CEO of Connolly Global Macro Advisors, “Monetary Union: a political impossibility theorem”, Banque AIG Market Intelligence Update, May 2005. 4 This view is supported as well by Stanford University’s James Sheehan in “Where have all the soldiers gone”, which describes the turning point for Europe as 1945, rather than 1968 or 1989. 5 While Ireland may accept bilateral EU and IMF money, it has so far resisted giving in on the greatest thorn in the side of Continental Europe: its 12.5% corporate tax rate.

The quiet fortitude of Silver Posted: 20 Nov 2010 02:00 PM PST

In The News Today Posted: 20 Nov 2010 01:37 PM PST Jim Sinclair's Commentary Three so far this week. Bank Closing Information – November 19, 2010 These links contain useful information for the customers and vendors of these closed banks. First Banking Center, Burlington, WI Allegiance Bank of North America, Bala Cynwyd, PA Gulf State Community Bank, Carrabelle, FL http://www.fdic.gov/   Jim Sinclair's Commentary Incapacity due to gridlock is now the definition of Washington's ability to handle a second banking crisis that is certain to come. This is the "why" of QE even though it is itself a guarantee of hyperinflation. The entire pressure will be on the Fed who possesses no other alternative. At this time the application of austerity is more dangerous. The entire Western world will go with QE to infinity no matter what the call is or how they camouflage it. Gold will trade at $1650 and beyond. Washington's efforts can been seen in the red circle. Jim Sinclair's Commentary No matter how difficult things are be sure to keep your feet on the ground. http://www.youtube.com/watch?v=_yHZDC3L1OA

Max Pain For Options Trading On Dec 2010 Silver Futures Posted: 20 Nov 2010 12:59 PM PST December 2010 options expiration day for gold and silver futures is on Tuesday, Nov 23rd 2010 (2 business day away). How things are looking after Friday, Nov 19th 2010 business day ended, you can see on the following image. Max pain for option trading with Dec 2010 Silver Futures is at $25 and last settled [...]

US Mint Reports Soaring November Month-To-Date Silver Coin Sales Posted: 20 Nov 2010 10:25 AM PST Is Max Keiser's attempt to put JP Morgan out of business working following the mother of all silver physical squeezes? The price of silver has been stable in the past few days, but if the US official precious metal seller is to be trusted, this will not last long. According to the US Mint, sales of 1-ounce American Eagle silver coins are headed for the strongest month since at least May, Bloomberg reports. More details: about 3,175,000 of the coins have been sold this month, compared with 3,633,500 in May, according to data on the Mint website. Silver futures in New York touched a 30-year high of $29.34 an ounce on Nov. 9. American Eagle coins also are available in gold and platinum. The Mint said 62,500 ounces of gold Eagles have been sold in November. What is interesting is that sales of the coins continue at an astronomic pace despite the nearly 10% premium one has to pay over spot. What is more interesting, is that the Mint has not run out yet. Yet the refreshing thing, is that instead of buying paper certficates promising that one's presumed purchases of gold is held by the DTCC, Americans are once again going straight into physical. Here is hoping Keiser's plan ultimately unravels whatever the RICO suit against JPM and HSBC leaves untouched. Total US Mint Sales HERE.. More Here..

If you're new to this whole ‘Crash JP Morgan Buy Silver' thing – watch this video (twice) Posted: 20 Nov 2010 10:15 AM PST

RAT A TAT TAT TAT TAKE THAT JPM YOU FUCKER BANG BANG BANK CRASH CRASH CRASH – OMG YOU GOTTA WATCH THIS ONE! Posted: 20 Nov 2010 09:59 AM PST MK: No white gloves for this Silver vigilante. I'm thinking, this is probably just the Silver he keeps around for fun and that the real stash is in the vault. 1:46 had me busting out laughing. This deserves some lesbian action. "I'd rather be watching lesbians right now."

Bob Chapman – great radio interview on Silver margin rate increases, vulnerability of the banks with huge short-Silver postions and a whole lot more. Posted: 20 Nov 2010 09:33 AM PST Bob Chapman talks Comex/CME, short selling, margin calls and everything you need to know to understand current market conditions relating to JPM's short-silver (3.3 bn. ounces) positions. MK – Note: Bob Chapman mentions that I've been a fan of his for twenty years. In fact, I've been reading Bob since the early 1980′s. He was [...] This posting includes an audio/video/photo media file: Download Now

December 7th (day of infamy?) bank run question Posted: 20 Nov 2010 09:17 AM PST Dear Mr. Keiser, Thanks for the show. Have found it informative and entertaining in equal measure – an excellent and rare combination. Are you aware there are people trying to get a bank run organised for the 7th December: http://www.facebook.com/event.php?eid=137793666269183 ? Do you think it would be a good idea to bring your silver bomb [...]

Currency War heats up: “Let Scotiabank Help You Crash JP Morgan” Posted: 20 Nov 2010 08:21 AM PST MK: This is a dream scenario. State banks attack JP Morgan by encouraging their customers to buy Silver. This is what Canada is doing. This is what the Irish, Greek, Latvian, and Icelandic banks should have been doing throughout the entire '00′s instead of being used by JP Morgan and Goldman to perpetuate global ponzi [...]

I Try To Buy Lunch Using SILVER Posted: 20 Nov 2010 07:40 AM PST MK: What I found interesting about this video is that the employees at the restaurant did not even know what the Silver coin was.

No words, no music, no graphics, no effects . . . PURE SILVER SPEAKS FOR ITSELF Posted: 20 Nov 2010 07:35 AM PST

2010 Proof Silver Eagle Coins Launch Posted: 20 Nov 2010 07:17 AM PST The US Mint today began selling the long-awaited 2010 Proof Silver Eagle coin, filling a void that has been felt by many collectors for over two years now. Opening demand was strong for the silver eagle, which resulted in early issues with the US Mint's ordering system. This was not much of a surprise, however, as [...]

Gold’s Holding Pattern is a Golden Opportunity Posted: 20 Nov 2010 07:16 AM PST Billionaire George Soros declares: "Conditions for gold are pretty perfect" Gold's holding pattern is a gift to bargain hunters Gold prices stood near the $1,350 range today on news that China's central bank acted to slow inflation but fell short of raising interest rates outright. Gold's holding pattern is a gift to bargain hunters because gold "should continue to remain well supported too, both by the growing debt crisis in the euro-zone peripherals, which could spill over to other countries at any time, and the expansion of liquidity on the back of renewed quantitative easing of U.S. monetary policy," Commerzbank analysts said. Richcomm Global Services' Pradeep Unni agreed, saying a weak dollar and a firmer euro "will continue to provide a bullish bias to the metal." The trend is "back up again" Gold prices surged back Thursday as the euro rose against the dollar on optimism of a bailout for Ireland. "Having held $1,330, and with the dollar a bit weaker … we are just following the trend back up again," the Bank of Nova Scotia's Simon Weeks said. VTB Capital's Andrey Kryuchenkov noted: "Should fear in the eurozone escalate, gold would draw fresh support from risk-averse buyers similar to what happened earlier this summer when investors scrambled for the safe-haven asset on fears of sovereign default." Investors also are watching China for potential news of an interest-rate rise, which would only create a buying opportunity for bargain hunters. Billionaire George Soros tips his hat to gold With quantitative easing going full-steam ahead and U.S. interest rates low for the foreseeable future, billionaire investor George Soros said the precious metal still has plenty of kick to it. "The conditions for gold are pretty perfect," he said Monday. Soros also said the present world order is on the brink of breaking down. "There is now a rapid decline of the United States and a rapid rise of China," he said. "It is happening very quickly. … If they persist in their present course, it will lead to conflict," he said, adding that China's neighbors are already getting nervous about its rising global influence. Read more Inflation surfaces at Walmart, not in feds' data Offering up its statistics Wednesday, the Labor Department said the core consumer price index, an inflation indicator that excludes food and energy prices, was unchanged in October. However, a new pricing survey of 86 products sold there – mostly everyday items like food and detergent – showed a "meaningful" 0.6 percent price increase in just the past two months, according to MKM Partners. At that rate, prices would be close to 4 percent higher a year from now, double the Federal Reserve's mandate. "I suspect that when [Fed Chairman Ben Bernanke] thinks about reflation, he has a difficult time seeing any other asset besides real estate," said Jim Iuorio of TJM Institutional Services. "Somehow the Fed thinks that if it's not 'wage-driven' inflation then it is somehow unimportant. It's not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price." Read more The Fed sticks to its quantitative-easing guns Ben Bernanke had to defend the Fed's actions on Capitol Hill, where he briefed skeptical lawmakers on the QE plan's merits on Wednesday, and some of his colleagues said the bank is likely to follow through on its entire $600 billion bond-buying program, citing weak economic data. "It looks like we'll be purchasing at this pace through the end of the second quarter to add up to $600 billion," St. Louis Federal Reserve Bank President James Bullard said. The Fed's QE plan came under fire this week from a group of prominent Republican-leaning economists and other experts. "The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment," they said in an open letter published in The Wall Street Journal and The New York Times. Top Republican lawmakers also sent Bernanke a letter warning that QE "introduces significant uncertainty regarding the future strength of the dollar and could result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles that could cause further economic disruptions." Read more Chinese march toward gold continues "China is considering raising its gold reserves, a move which would push up gold prices in the future, a person providing consulting services to the Chinese government said" in a Chinese daily-newspaper article. "The source told the 21st Century Business Herald [that] China may gradually increase gold holdings as it is not possible for the country to buy large amounts of the metal within a short time." Two Chinese precious-metals experts also weighed in on gold's prospects for the article: "Chen Beilei, director of metals and mining at BOC International Holdings, said China may increase its gold reserves to diversify its foreign exchange reserves. … Demand for gold may continue to rise due to inflationary risks brought by Washington's recently announced quantitative easing program, high public debts and low economic growth in Europe, Chen said. … Feng Rui, president of Silvercorp Metals, said the decline [in gold prices] is an adjustment in the upward trend … and the metal may rise by as much as 20 percent in the future. Feng predicted the price of gold would peak at $1,600 per ounce in 2011." Read more "Bullish" Barclays Capital sees $1,485 gold this year Gold could hit a record $1,485 by year's end, Barclays Capital analysts say. "Strategically, we are bullish," the bank said. "Medium-term trend followers are unlikely to have been panicked out of their positions given that important support between $1,314 and $1,331 is still holding. A bearish divergence signal on weekly charts, though, warns of downside risk throughout the month, and we still fear an important clearout below $1,314 to $1,250 before gold recovers. We would be bargain-hunting as the price approaches $1,250." Read more French banking giant raises its precious-metals forecasts BNP Paribas said Wednesday it has raised its 2011 forecasts for gold and silver (as well as palladium and platinum). Gold: The bank increased its gold forecast for the first quarter of next year to an average $1,415 from its previous estimate of $1,280, with the price expected to rise to an average $1,565 by the end of next year, compared with a previous $1,310 forecast. "Gold is considered one of the best hedges against either of these risks," BNP Paribas analysts wrote, referring to dollar weakness and rising inflation fueled by QE. "Add to inflation expectations a low nominal interest rate environment, and the decline in expectations for real returns makes alternative asset classes, such as commodities, appealing for investors." Silver: The bank expects silver to average $25.30 in the first three months of next year, up from its previous forecast of $19.75, rising to an average $27.45 by year's end. The spot silver price has risen by more than 50 percent this year to 30-year highs well above $25. Read more Any dip is a buying opportunity, experts concur The trend is positive: "We may see some more consolidation in gold," said INO.com chief and Market Club co-founder Adam Hewison in a Monday video chart analysis of gold. "Now please don't misunderstand what I'm saying. We are not bearish on gold longer-term. The trend in fact is still very positive. … The longer-term trend in gold … is very clearly up, and it's going to probably have some pullbacks, which is possible, and then I think we're going to see the market go to new highs. I don't think we've seen the highs yet in gold." Watch video Accumulate on weakness: "We don't think that the U.S. dollar fundamentally should deliver any form of sustained strength, so we wouldn't expect to see this serve as a game changer for the commodities," Fat Prophets analyst Colin Whitehead told CNBC Monday. "The underlying fundamentals for gold – and that is strong and continued investment demand – remain in place over the longer term. So we don't think that we're in bubble territory yet. We're really just in the foothills of the gold bubble. … Certainly as we look at gold, it's not yet clear as to whether the correction has petered out. We're certainly going to have some consolidation ahead of what we think is a further upface. So we'll be looking to accumulate on weakness there." Watch video A healthy correction: "This [dip] is just healthy," CIBC World Markets Vice Chairman Warren Gilman told CNBC Tuesday. "Metal prices probably got a little bit ahead of themselves during the September and October period. Prices got to pretty lofty levels, and I think this is a healthy correction. … I think gold is going to prove to be most resilient. People have been waiting for an opportunity for an entry point, and I think this is probably that opportunity." Agreeing with CNBC anchor Bernard Lo that paper currencies are vulnerable, Gilman adds: "That's one of many reasons, and obviously we have inflation on the horizon, and there are plenty of reasons to buy gold, and I think there are a lot more buyers than sellers in this environment. … I think we could get down to $1,250, or we could potentially break $1,300, but I wouldn't expect it to go much further than that." Asked what sort of gold to invest in, Gilman says: "I think I would probably shy away from the equities because the equities have had a good run in the last little while. I would go for physical. … Buy coins." Lo interjects: "Krugerrands, Maple Leafs, and Pandas?" "Indeed," Gilman answers. Watch video Stay the course: In a Monday show, CNBC "Fast Money" analysts applauded billionaire hedge-fund magnate John Paulson's decision to maintain his massive gold position. "You look at his holding, gold. He kept it; he left it alone," Joe Terranova said. "I don't know why you would be selling gold right now. You should hold onto it. He's doing the right thing. There's nothing in the price action that tells you to sell." Analyst Carter Worth agreed: "The reason to sell something, right, is weakness that suggests further weakness, or hyper-strength that suggests it's over. Gold has been deliberate and orderly and measured – a nice bounce over the last three months. … Stay the course." Watch video ETFs lose luster in the shadow of physical gold Doubts continue to be raised about the reliability of certain exchange-traded funds, and Blanchard and Company, Inc. agrees the issue is a troublesome one. Read the fine print: In a Nov. 10 broadcast, CNBC star Rick Santelli called into question the actual physical precious-metals backing behind the large exchange-traded funds like SLV and GLD. "If you're looking for something to worry about, think about all the coverage we in house have been giving to ETFs. I like futures contracts because I know there's silver there, and if I want it, I'll get it. But ETFs I still have questions about. … It's clear that you can't get the physical gold if you want it – they can give you money (instead). Read the fine print – that's all I'm saying. And I want to put somebody on who's actually seen their inventory. You think we can find somebody who will actually go on and say, 'I've seen it'? I don't think so." Watch video Hosted by "hostile entities": Seeking Alpha contributor Mark Anthony has articulated similar fears in a recent article: "I always encourage people to directly own physical precious metals. I do not trust the physical gold ETF, GLD, and the physical silver ETF, SLV. Like some other folks I expressed skepticism whether these funds actually hold the physical precious metals as they claimed. These ETF funds were hosted by entities known to be hostile to precious metal investors and known to have large short positions in silver, so why should people trust them?" Read more Similar concerns surfaced in a Financial News article Monday titled "Bearish trustees dig deep for gold and diamonds": Iain Tait, partner at UK wealth adviser London & Capital, received requests from separate trustees in Jersey and Guernsey for physical diamonds and gold bars last week. He said: "There is the feeling that ETFs are the home of the speculator, while bars and real diamonds are the domain of wealthy families trying to protect themselves." Ned Naylor-Leyland, partner at Cheviot Asset Management, said a lack of trust in banks and the spectre of counterparty risk was a problem. "I hear Swiss banks are turning out their vaults for clients wanting to take home their gold. Trust is wearing thin." Some investors are put off by the idea that gold ETFs can contain other financial products, such as swaps or derivatives, even if just a small percentage of their weighting. Angus Murray, chief executive of London-based Castlestone Management, said: "Physical gold is simply metal without any other financial product or structure. My clients want to own an unleveraged real asset." He added: "If the ETF doesn't have the ability to list additional shares there can be a pricing issue. Why complicate it?" Read more Don't lose sight of the big picture Analyzing gold's correction this week in a Seeking Alpha post, Gold in Mind blogger Marek Kuchta concludes: The only thing that somewhat makes sense is the big picture and the general direction. The gold price has so far gained 20 percent in 2010, even after the current drop. All primary, long-term reasons for gold's continuous rise such as exorbitant government debt and unfunded liabilities, quantitative easing, high volatility and uncertainty in all markets, fear of commodity inflation (to be followed by imported domestic inflation), and many more, remain in place. There is no obvious reason for a lasting trend reversal in the gold price. Unfortunately, very obvious are the reasons for a further decline of the value of the dollar and possibly also the pound and the euro. So, strategic investors and savers, don't lose your nerves. Wherever we are headed, it will be a bumpy ride that may end up in a complete off-road trip. Don't forget where the north is, think about what you'll need should we arrive in the wilderness. Nothing is safe there. Diversify, buy gradually, avoid paper promises. Keep your economic seat belt buckled, keep your eyes open, keep gold in mind. Related posts: Collector Base Strong, Prices Holding Steady Platinum Night was Golden; Bellwether Sale Sparks Markets for U.S. Coin Rarities Second commemorative golden coin was presented at Trakai Castle

Price suppression coming undone, Turk tells King World News Posted: 20 Nov 2010 07:16 AM PST 11:35a ET Saturday, November 19, 2010 Dear Friend of GATA and Gold (and Silver): GoldMoney founder and GATA consultant James Turk tells Eric King of King World News that more short covering in the precious metals seems likely next week as today's precious metals markets look increasingly like those of the late 1970s, as price suppression came undone. You can listen to the interview here: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/11/20_Jame… CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit:http://www.gata.org/node/16

Weekly precious metals review at KWN has Haynes, Norcini, Arensberg Posted: 20 Nov 2010 07:16 AM PST 11:10a ET Saturday, November 19, 2010 Dear Friend of GATA and Gold (and Silver): The weekly precious metals market wrapup at King World News features Bill Haynes of CMI Gold & Silver, Dan Norcini of JSMineSet.com, and the Got Gold Report's Gene Arensberg. You can listen to it at the King World News Internet site here: http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/11/20_KWN_… Or try this abbreviated link: http://bit.ly/c0TuVM CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Schiff interview with GATA's Douglas covers sale of imaginary gold Posted: 20 Nov 2010 07:16 AM PST 11a ET Saturday, November 20, 2010 Dear Friend of GATA and Gold (and Silver): GATA board member Adrian Douglas' interview on investment fund manager Peter Schiff's Internet radio show yesterday covered the massive sale of imaginary gold — the fractional-reserve gold banking system — and ran about 16 minutes, and you can listen to it at the Schiff Radio Internet site here: http://schiffradio.com/pg/jsp/charts/audioMaster.jsp?dispid=301&id=5116… CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property 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: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit:http://www.gata.org/node/16 ADVERTISEMENT Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia VANCOUVER, British Columbia — Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20. Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan powerplants in Mongolia." The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies. For the complete press release, please visit: http://prophecyresource.com/news_2010_nov11.php

Analysts Who Put the Bull in Bullish: Gold Outlook Posted: 20 Nov 2010 07:16 AM PST The Gold Report submits: By Brian Sylvester Dundee Wealth Inc. Chief Economist Martin Murenbeeld is long on opinion and the gold market. "Gold bullion is in a long-term bull market. And that's going to go on for a number of years," he predicted during the recent Forbes & Manhattan Resource Summit in West Palm Beach, Fla. Analysts David Keating, Mackie Research Capital Corp., and Paolo Lostritto, Wellington West Capital Markets, also participated in this Gold Report exclusive, giving candid views of the global gold markets and plenty of reasons to be a gold bull. "Gold bullion is in a long-term bull market. And that's going to go on for a number of years," Martin predicted during a recent presentation at the first annual Forbes & Manhattan Resource Summit in West Palm Beach, Florida. His remark was included as one of a handful of reasons to be bullish about gold and commodities. Read more »

Gold Seeker Weekly Wrap-Up: Gold and Silver End Mixed on the Week Posted: 20 Nov 2010 07:14 AM PST Gold saw modest gains in Asia before it fell back to see an $11.32 loss at $1341.58 at about 10AM EST, but it then rallied back higher into the close and ended with a gain of 0.01%. Silver fell as much as 53 cents to $26.36 by about 10AM EST before it also rallied back higher in late trade and ended with a gain of 1%. Read more….

COT Silver Report – November 19, 2010 Posted: 20 Nov 2010 07:13 AM PST COT Silver Report – November 19, 2010 Read more….

Why have gold and silver been falling in this time of monetary turmoil? Posted: 20 Nov 2010 07:12 AM PST Reasons behind the recent weakness in the gold and silver price despite, as George Soros commented, conditions for gold looking "perfect". Read more….

Russia's Central Bank Buys 600,000 Ounces of Gold In October Posted: 20 Nov 2010 06:21 AM PST "U.S. Mint sells 32,405,500 silver eagles so far this year... and 3,775,000 so far in November. SLV ETF adds 1,319,879 ounces of silver. JPMorgan/HSBC now have 25 silver price manipulation lawsuits filed against them... and much, much more. " Yesterday in Gold and Silver Well, with 20/20 hindsight, it's obvious that I filed my Friday commentary right at gold and silver's high of the day... which was shortly before 5:00 a.m. Eastern time yesterday... as it was mostly down hill from there. Gold's high price print was around $1,363 spot in early London trading... but then quickly ran into not-for-profit sellers that sold the price down to its low of the day [$1,340.90 spot]... which occurred at the London p.m. gold fix at 10:00 a.m. Eastern time. The price bounced back quickly during the next hour of trading... and then went sideways for the rest of the New York trading session, finishing up a magnificent 60 cents. Silver's high tick of the day [around $2...

Congress Takes Vigorous Steps to Look Like it’s Planning to Reduce Deficit Posted: 20 Nov 2010 06:00 AM PST Erskine Bowles, President of UNC, and former Wyoming Senator, Alan Simpson, the co-chairmen of President Obama's National Commission on Fiscal Responsibility and Reform, are getting political leaders caught up with the obvious reality of the US' precarious financial state… that the budget deficit is quickly hurtling the nation toward a debt crisis not unlike Greece, but on a much larger scale. Yet, even with annual interest payments alone already totaling roughly $200 billion, there is little political will to make the kind of cuts necessary to have an impact on the deficit. Policy makers and citizens alike want action to be taken, but the required sense of taking personal responsibility — with fewer public services, higher taxes, or reduced welfare — is still lacking. This cartoon came to our attention via The Mess That Greenspan Made's post on the appearance of getting something done. Congress Takes Vigorous Steps to Look Like it's Planning to Reduce Deficit 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."

Is Ferdinand Pecora Rolling Over in His Grave? Posted: 20 Nov 2010 05:58 AM PST Can the state of affairs Larry Doyle complains about be changed when we have a corrupted system to work within to change its own nature? - Ilene  Is Ferdinand Pecora Rolling Over in His Grave? Courtesy of Larry Doyle at Sense on Cents Where are our statesmen? Where are the individuals who would choose to sacrifice personal gain for our national welfare? I am not talking about mere public policy implementation. I am talking about those who would choose to pursue and embrace the truth while exposing the incestuous Wall Street-Washington relationship that has brought our nation to its knees. Where is today’s Ferdinand Pecora when we need him? I shudder to think that the great Pecora, who led the investigation of Wall Street practices which brought on the Great Depression, might be rolling over in his grave right now. Why’s that? Reports released yesterday indicate that the Financial Crisis Inquiry Commission (FCIC), this generation’s Pecora Commission, is not exactly embracing Ferdinand’s ‘take no prisoners’ approach, but likely playing politics. Are you kidding me? The commission charged with exposing the people and practices behind this devastation is locked in a political dogfight? While I am not surprised, I am enormously disappointed. Perhaps the FCIC will surprise me and all of us, but for now my confidence level in the FCIC has dropped precipitously. While little attention is brought to this story in our domestic media, the Financial Times yesterday highlighted, Crisis Panel Delays Report Amid Rancor: The Financial Crisis Inquiry Commission has delayed its report into the causes of the crisis amid rancour between members of the panel. Set up by Congress as a version of the widely praised Pecora commission, which in the 1930s studied the causes of the Great Depression, the FCIC has told the White House it wants to delay publication of the report from December. ….the effectiveness of the investigation and whether all members of the FCIC will sign off on the final report when it is delivered in January is still in doubt. In particular, Republican members have wanted more of a focus on the government’s role in the crisis and are concerned that Mr. Angelides, a Democratic appointee, is focusing too much on Wall Street’s role, according to people familiar with the committee. Some have argued that the panel is yet to get into substantive discussion on the causes of the crisis and say they do not believe that will happen. WOW. Is this the best America gets? The commission charged with pursuing the truth after eleven months “is yet to get into substantive discussion on the cause of the crisis.” And people are surprised as to why The Tea Party is thriving? Boy, what would our friend Ferdinand have to say about this state of affairs? If only we could bring him back. Well, let’s do the next best thing. Let’s go back and take a peek at the preface to Ferdinand Pecora’s book Wall Street Under Oath. As you read Pecora’s words, reflect upon today’s money-changers on Wall Street and also today’s financial policemen in Washington. Pecora wrote:  Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speculative excesses of the “wild bull market” of 1929 still give evidences of their existence and influence. Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back to pernicious activity. Frequently we are told that this regulation is throttling the country’s prosperity. Bitterly hostile was Wall Street to the enactment of the regulatory legislation. It now looks forward to the day when it shall, as it hopes, resume the reins of its former power. (LD’s comment…please do not tell me that the Dodd-Frank financial regulatory reform will truly make an impact. Wall Street is already hard at work gutting the Volcker Rule to limit proprietary trading!!) That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt. Indeed, if you now hearken to the oracles of The Street, you will hear now and then that the money-changers have been much maligned. You will be told that a group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few. You will be assured they had nothing to do with the misfortunes which overtook the country in 1929-1933; that they were simply scapegoats sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob blindly seeking victims. These disingenuous protestations are, in the crisp of a legal phrase, “without merit.” The case against money-changers does not rest on hearsay or surmise. It is based upon a mass of evidence, given publicly and under oath before the Banking and Currency Committee of the United States Senate between 1933-1934, by The Street’s mightiest and best-informed men. Their testimony is recorded in twelve thousand printed pages. It covers all the ramifications and phases of Wall Street’s manifold operations. The public, however, is sometimes forgetful. As its memory of the unhappy market collapse of 1929 becomes blurred, it may lend at least one ear to the voices of The Street subtly pleading for a return ” to the good old times.” Forgotten, perhaps, by some are the shattering revelations of the Senate Committee’s investigations, forgotten the practices and ethics that The Street followed and defended when its own sway was undisputed in the good old days. After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempts be made to abolish that post. It is in the hope of rendering this service, especially for the lay reader unfamiliar with the terminology and conduct of The Street, that the author has endeavored, in the following pages, to summarize the essential story of that investigation—an inquiry which cast a vivid light upon the unhabitated mores and methods of Wall Street. Ferdinand Pecora New York City February, 1939 Larry Doyle The FCIC NEVER responded to any of the details I shared with them on a wide array of topics regarding FINRA's relationship with the investment banks, its timely liquidation of ARS (auction rate securities), the allegation of a FINRA investment in Madoff, and the allegation that FINRA lied in the proxy statement utilized for the formation of the organization. Do we know if the FCIC ever used its subpoena power?  Originally published on Larry Doyle's Sense on Cents, Is Ferdinand Pecora Rolling Over in His Grave?

JPMorgan: Dollar to become the world's weakest currency Posted: 20 Nov 2010 05:37 AM PST INTERNATIONAL. The dollar may fall below ¥75 next year as it becomes the world's "weakest currency" due to the Federal Reserve's monetary-easing program, according to JPMorgan & Chase Co. The U.S. central bank, along with those in Japan and Europe, will keep interest rates at record lows in 2011 as they seek to boost economic growth, said Tohru Sasaki, head of Japanese rates and foreign-exchange research at the second-largest U.S. bank by assets. U.S. policy makers may take additional easing steps following the US$600 billion bond-purchase program announced this month depending on inflation and the labor market, he said. "The U.S. has the world's largest current-account deficit but keeps interest rates at virtually zero," Sasaki said at a forum in Tokyo yesterday. "The dollar can't avoid the status as the weakest currency." The Fed said on Novenebr 3 it will buy US$75 billion of Treasuries a month through June to cap borrowing costs. The central bank has kept its benchmark rate in a range of zero to 0.25% since December 2008. The Bank of Japan on October 5 cut its key rate to a range of zero to 0.1% and set up a ¥5 trillion (US$59.9 billion) asset-purchase fund. More Here.. How Boomers & Retirees Will Become Bailout, Stimulus & Currency War Casualties

Councilman Takes the Cake Posted: 20 Nov 2010 05:00 AM PST Earlier this week, we came across the story of young Andrew DeMarchis and Kevin Graff, a couple of 13-year old students who were caught selling cupcakes and baked goods at their local market. The two hoodlums were discovered peddling a range of treats, from cookies to brownies…even Rice Krispies. As is often the case with aspiring criminals, this was not the first time the boys had flouted the law. Readers may be shocked to learn that this was actually the second time these would-be ruffians had conducted their illicit activities in public. On the first occasion, another bake sale, the boys managed to net a cool $120 in profit. And, like greedy capitalists the world over, the team invested half the loot to buy a cart from Target and even expanded their operations to include the sale of water and Gatorade. Who knows how many treats the boys might have sold or how large their empire of dough-sponsored delinquency might have grown if left unchecked by the authorities. They had, according to one report, told a few members of their trusted inner circle (their Moms and Dads) of their intentions to one day open their own restaurant. Clearly, something had to be done. Enter our hero, local Councilman Michael Wolfensohn. Upon hearing of the boys vast and expanding operation down at the local market, Cr. Wolfensohn, his superhero cape sewn with the very threads of truth and justice, decided to act. Doing what any unquestioning citizen living in a police state would do after learning that two boys had decided to sell cupcakes, Wolfensohn called the cops. On Saturday, October 19, after about an hour of business – during which the perpetrators had raised around $30 (in cash) – police arrived on the scene. The store – and the seed of a crime syndicate that may one day have rivaled all the government agencies of the world combined – was shut down. Justice: 1; Kids trying to sell brownies: 0. "All vendors selling on town property have to have a license, whether it's boys selling baked goods or a hot dog vendor," explained Wolfensohn. When asked by the boys' parents whether he might have just informed them that they needed a license rather than calling the police, Wolfensohn laid out his watertight case. "In hindsight, maybe I should have done that, but I wasn't sure if I was allowed to do that," he said, demonstrating an admirable incapacity to think for himself. "The police are trained to deal with these sorts of issues," he added. We can only hope their brush with the law sets these two lads back on the right path, one that excludes entrepreneurial ambition and fosters a healthy fear of the state. As for Wolfensohn, this editor would like to formally recommend him for a senior position with the TSA, where no incident is too small to completely blow out of proportion and no threat, imagined or actual, is too big to miss altogether. Enjoy your weekend. Cheers, Joel Bowman for The Daily Reckoning Councilman Takes the Cake 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."

Global Financial System Crisis, Collapse in Consumer Spending, Unemployment, Rising Prices Posted: 20 Nov 2010 04:52 AM PST We hear stories about oil and about how it will probably move higher, perhaps to $150.00 a barrel and perhaps higher. This is the first time in more than three years that it has moved to lofty levels. The net speculative long position is more than 200,000 contracts, or about 35% higher than in 2007. Some economies are doing well, particularly in Asia and in Latin America, but not enough to create such higher prices. $60.00 a barrel would more nearly meet demand.

KWN Weekly Metals Wrap – Friendly Trends Posted: 20 Nov 2010 03:36 AM PST HOUSTON – Yesterday's CFTC commitments of traders (COT) report for gold and silver futures did not disappoint us COT mavens and pro traders camped on the long side. To learn why, Vultures (Got Gold Report subscribers) will want to tune in and listen to Eric King's interview with 37-year veteran bullion dealer Bill Haynes of CMI Gold and Silver, savvy commodities trader Dan Norcini of Jim Sinclair's J.S. MineSet and our own Gene Arensberg of Got Gold Report, in this week's important King World News Weekly Metals Wrap audio program for November 20. ...

Growth vs. Value - The New Buggy Whip Posted: 20 Nov 2010 03:22 AM PST There once was a time when the "learned" believed the sun revolved around the earth, the world was flat, and government spending led to sustainable economic growth. This week's Investment Advisor Ideas focuses on another such misconceived idea, classifying stocks with growth and value designations. While the investment consultant community has firmly adopted the growth vs. value concept, at some point, hopefully in the near future, this classification will go the way of the buggy whip, leaching, and the above silly misconceptions. After all, the classification tends to imply a choice between owning a stock that can grow but doesn't offer much value, versus one that offers a compelling value but doesn't offer much growth. Such a choice is silly - every stock valuation implies a future stream of cash flows to justify its price. If today's price implies a smaller cash stream than a company is capable of generating, it is a value stock. If a stock's price implies greater cash stream than a company is capable of generating, it is a value trap, regardless of how sexy its products are or how strong its future revenue growth appears. It does not get much simpler than that.   Years ago, in 2005, I traded emails with a popular financial writer that had just criticized AutoZone for failing to deliver sufficient comparable store sales growth, though the company continued on its stated path of improving margins. He appeared smart as AutoZone shares were underperforming, and carried on with his typical snarky tone in his email. I more or less let him know he was clueless and silly for not understanding wealth creation and how that translates to intrinsic value. Needless to say, he did not reference my analysis in his later article on the company and AFG failed to obtain a PR win. Our analysis was vindicated, however, as over the past 5 years AZO has moved from approximately $80 at the time to $250 today, while the S&P 500 remained flat. Worth noting, for most of the years, AutoZone's comparable store sales growth was still negative to mediocre. His (and other investors) obsession on "growth" versus "value", rather than understanding that AZO was taking the right steps to create shareholder value and the cash flow expectations embedded in its price were very reasonable caused him to miss a great trade of our day. He was fixated on AZO as a growth stock that failed to deliver "growth", rather than understanding AZO's valuation. It is often said that history repeats itself, and today's lesson may apply to many technology giants. For example, CSCO was recently crushed on weak growth numbers, but justifying its stock price requires virtually no top line growth if it can maintain its existing margin levels. As today's kiddy set often whines - Just saying....   Much like Beta as a risk proxy survived long after its "use by" date, due to its simplicity so I suspect has been and is the case for the growth vs. value classification. Instead we would like to see stocks classified in duration terms, as companies will pursue different strategies which lead to different cash flow durations. This provides a much better framework to structure a portfolio for different phases of the economic cycle. Further, it better allows analysts to discuss stocks in terms of the operational expectations (sales growth, margins, and turns), and how they translate into future cash flows to evaluate how attractive a stock looks as an investment. At the same time, we are also mindful of reality - some investors still want traditionally defined growth and value stocks. Like golfers with stubborn hitches in our swing, we understand the need to "play through our slice" and thus prepared this list to help identify attractive "growth" and "value" stocks. The article below is a sample of our free Investment Advisor Ideas Newsletter.  Click here, to view the most current issue.     Sincerely, Value Expectations   Growth vs. Value - The New Buggy Whip Traditionally most investors tend to identify themselves as either growth or value oriented when they approach constructing their portfolios. There are many varying approaches of how to classify stocks in either category, but growth investors typically focus on earnings and sales growth regardless of the company's ability to add value to its shareholders, whereas value investors search for stocks trading at relatively low price multiples. We believe that both approaches for picking stocks have their pitfalls if the investor fails to understand the cash flows that are driving the company's value and how they relate to its stock price. If a growth company is capable of generating larger cash stream than is implied by its current stock price, we consider it attractive. Likewise, if a low P/E company's stock price implies greater cash stream than a company is capable of generating, it is a value trap. Below we have provided a list of stocks which we consider attractive right now in both the "value" and "growth" universes, to help investors from both groups identify investment opportunities. But first let's examine the past performance of growth vs. value stocks. We looked at many past studies comparing the performance of the two groups and although the approaches to differentiate one from the other may vary, most studies tend to show that value stocks have outperformed their growth brethren over the long haul, even when taking into account the high growth technology led stock markets of the 1990's, just prior to the tech bubble. The chart below is a study by Fama & French (via thedividendguyblog.com), comparing the value of a one-dollar investment back in 1927, based on size and growth/value characteristics. This study confirms that value stocks did earn far greater returns than the growth stocks regardless of the size classification.     This is a sample of our free Investment Advisor Ideas Newsletter.  Click here, to view the rest of this issue.   As mentioned before, there are many different methods investors use to separate growth and value universes - here are some of the most common characteristics for the two groups: Growth companies tend to have... High earnings growth rate High sales growth rate High R.O.E High profit margin No or low dividend yield Value Companies tend to have... Low P/E ratio Low price/sales ratio Low price/cash flow Low price/book ratio High dividend yield At AFG we have developed our own methodology of classifying the companies within a certain universe as value and growth - we use their relative Market Value/Net Invested Capital ratio. Companies with MV/IC greater than the median for the group are considered "growth", and those lower than the median are considered "value" stocks. The following chart provides some insight into how growth has fared relative to value stocks in the past based on AFG's classification. As you can see, in line with what we have already found out, AFG defined value stocks have outpaced growth stocks over the past 12 years.  In addition, we wanted to shine some light on how our buy and sell recommendations have done within each group. The chart below demonstrates that there is a significant positive spread between the returns of the companies we find attractive and those we recommend to stay away from in each style category. Now that we have viewed the past performance, let's look at our outlook of the attractiveness of each investment style going forward using our EM framework and valuation metrics. Based on current valuation attractiveness within our default valuation model, value looks more attractive as an investment opportunity than growth in any size category (small, mid, large), with the large cap value bucket looking the most attractive of the bunch.     In an ideal world our portfolios would be filled with stocks with booming earnings growth and discounted price tags, however in reality any solid growth stories will attract investors, which inflate the price. We recommend not to automatically ignore companies based on style as there are plenty of attractive opportunities in both the growth and value universes, especially when utilizing AFG's research and valuation techniques to identify attractive long and short prospects. By not overlooking companies based on style you will increase the size of your fishing pond and your portfolio will benefit from the diversification. In the table below you will find a list of companies in both styles (based on MV/IC) that look attractive going forward. When creating our list of Attractive Growth/Value stocks we looked for companies that fit the following criteria. &iddot; Attractive valuations &iddot; Profitable from an economic standpoint &iddot; Expected to improve economic profitability &iddot; Poised to outperform   This is a sample of our free Investment Advisor Ideas Newsletter.  Click here, to view the rest of this issue.

Schiff interview with GATA's Douglas covers sale of imaginary gold Posted: 20 Nov 2010 03:04 AM PST 11a ET Saturday, November 20, 2010 Dear Friend of GATA and Gold (and Silver): GATA board member Adrian Douglas' interview on investment fund manager Peter Schiff's Internet radio show yesterday covered the massive sale of imaginary gold -- the fractional-reserve gold banking system -- and ran about 16 minutes, and you can listen to it at the Schiff Radio Internet site here: http://schiffradio.com/pg/jsp/charts/audioMaster.jsp?dispid=301&id=5116... CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property 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: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit:http://www.gata.org/node/16 ADVERTISEMENT Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20. Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan powerplants in Mongolia." The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies. For the complete press release, please visit: http://prophecyresource.com/news_2010_nov11.php

Are Expert Networks About To Be Exposed As The Ringleader In The Biggest Insider Trading Bust In History? Posted: 20 Nov 2010 03:04 AM PST Over a year ago, Zero Hedge published an expose in three parts (two of them in the form of direct letters to Andrew Cuomo) discussing the possibility that so-called "expert networks" are nothing less than legalized insider trading rings for the uber-wealthy, operating largely unsupervised, and leaking selective information to preferred clients. For those who may be new to this topic, we suggest catching up on Part 1, Part 2 and Part 3. Subsequently, we also suggested that expert networks would be implicated in the bust of Galleon Partners, the Goldman "Huddle", the collapse of FrontPoint Partners and, most recently, that expert networks may have been directly or indirectly involved in facilitating the record historical P&L of such hedge fund "titans" as SAC Capital. Today, via the Wall Street Journal, we realize that not only have the good folks at the SEC been diligently reading us for the past 13 months, but that we may have been right all along (once again). To wit: "Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter. The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say." Good bye expert networks (and many, many hedge funds) - we hardly knew you.  More from the WSJ: The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say. One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide "expert network" services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge. Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries. "I have no comment on that," said Phani Kumar Saripella, Primary Global's chief operating officer. Primary's chief executive and chief operating officers previously worked at Intel Corp. (INTC), according to its website. In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. (GS) bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment. Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation. "Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web." The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group (JNS), Wellington Management Co. and MFS Investment Management. SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan. Some more on expert networks: Expert-network firms hire current or former company employees, as well as doctors and other specialists, to be consultants to funds making investment decisions. More than a third of institutional investment-management firms use expert networks, according to a late-2009 survey by Integrity Research Associates LLC in New York. The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.   And it is not only the SEC who reads us: