Gold World News Flash

---

• Rob McEwen - Gold Mania, Then a Re-Writing of the System
• The Euro Has Turned
• America's Standard of Living is About to Fall Off a Cliff
• The Pension Conundrum?
• NY Times' Floyd Norris: Pondering the causes of gold fever
• NY Times' Floyd Norris: Pondering the causes of gold fever
• Is A Twenty Year Low On The Real (Not Nominal) S&P Approaching?
• Gold fever: Pondering the causes
• In The News Today
• Matt Taibbi: It's Rigged, Everyone Is Insider Trading
• Gold Sticker Shock and Silver Surge
• Dollar vs. Emerging Currencies is a Boon for Silver
• Holiday Squeeze on the Dollar, Gold & Stocks
• LGMR: Gold – "Buy on Dips" Advised as Irish Crisis Tips Contest from Dollar to Euro
• Embry expects a mania in precious metal mining shares
• Despite A Crumbling Europe, Goldman Sticks With Its 12 Month $1.55 EURUSD Forecast
• John Embry - There Will Be a Mania in Gold & Silver Shares
• Rosenberg: "I Think The Dramatic Fiscal Tightening We Are Seeing In Ireland And Others Is Insane"
• Reg Howe: Three years of contraction and concentration in gold derivatives
• Wouldn't China love to trade U.S. Treasuries for U.S. gold?
• Wouldn't China love to trade U.S. Treasuries for U.S. gold?
• The "Fixes"
• Driving the News Agenda: Jones and Keiser
• Nasdaq stocks look a bubble compared with gold producers
• Gold Well Below Inflation Adjusted 1980 High in Deutsche Mark
• Gold – "Buy on Dips" Advised as Irish Crisis Tips "Ugly Contest" from Dollar to Euro
• Buy Gold: It’s the Only Way to Combat Government Spending
• Is SLV A Tool For Insider Trading
• All major bull markets tend to move in three phases
• The gold records and accounting procedures of the Bank for International Settlements, the central bank of the central banks, are ambiguous and confusing and seem to facilitate the double counting of central bank gold
• SLV Adds Another 1,661,992 Troy Ounces of Silver
• Euro collapse winner Germany reports strong data
• The Day the Dollar Died
• Butler: The silver short position is much bigger than gold in every measurement, especially compared to world inventories. Silver’s relative short position is more than 100 times larger than gold’s

Rob McEwen - Gold Mania, Then a Re-Writing of the System Posted: 25 Nov 2010 05:00 PM PST With gold and silver consolidating recent gains, King World News interviewed Rob McEwen, former Founder and CEO of Goldorp and current Chairman and CEO of US Gold. When asked about the possibility of hyperinflation occurring in the United States, Rob compared the US to Weimar Germany and stated, "In January of 1919 you could buy one ounce of gold that was selling for $20 an ounce for 170 reichsmarks.  Four years later in November of 1923, to buy one ounce of gold you needed 87 trillion reichsmarks, now that's twelve zeros.  And it doesn't matter how much money you had in the bank, it was worthless if you left it in German marks." This posting includes an audio/video/photo media file: Download Now

The Euro Has Turned Posted: 25 Nov 2010 02:21 PM PST The call that a turn in the dollar was imminent by Brown Brothers Harriman’s Mark Chandler is looking more prescient by the day (click here for the call). September and October was all about pricing in Ben Bernanke’s quantitative easing, and that is looking pretty much done. The next play in this soap opera will see “uncertainty” emigrate from the US to Europe, sending the dollar off to the races and the Euro in for rehab. Lindsay Lohan, eat your heart out. A reemergence of the “PIIGS” disease, concerns about the deteriorating quality of the lesser sovereign credits in Europe, is now unfolding as the triggering event. US interest rates rising at the long end are adding fuel to the fire, shifting interest rate differentials overwhelmingly in Uncle Buck’s favor. It also helps that 95% of traders are bearish on the dollar, the surest indicator you’ll ever see that it is about to go the other way. To quote hockey great, Wayne Gretzky, “You don’t want to aim where the puck is, but where it’s going to be.” While America’s trade deficit remains massive, that shortfall is being overwhelmed by enormous amounts of foreign capital pouring into our stock and bond markets, on which Ben has painted a giant bullseye. It all adds up to the $1.4250 print we saw on the Euro two weeks ago marking the high. Rallies from here in the European currency are to be sold. Players new to the space can achieve this through buying the (EUO) ETF, a leveraged 200% short bet against the Euro. Looking at the charts and the momentum, we could see a plunge below $1.33 by year end. Analysts are targeting $1.17 sometime next year, which would out the EUO at $24, a tidy 24% potential return. Overshoot could take us as low as $1.10, taking the EUO to $26 and a gain of 37%. Don’t go on this date without protection, so keep a stop at $1.42. To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

America's Standard of Living is About to Fall Off a Cliff Posted: 25 Nov 2010 02:17 PM PST The social net has become a bit more frayed. Soon extended unemployment benefits will cease and 2 million Americans will have to dip into their savings, if they have any. This is an outgrowth of the effects of free trade, globalization, offshoring and outsourcing. We have lost 8.5 million jobs over the last ten years to this destructive process. We have seen more than 42,000 manufacturing plants leave the country as well. There are now more than 17 million Americans unemployed and the U6 official government unemployment figures 17%. If you remove the bogus birth/death ration, the real figure is 22-5/8%. Over that ten-year period we have lost about 5.5 million manufacturing jobs or about 1/3rd of that labor force. As recent as 1985, 25% of output was in manufacturing, now it is close to 11%. America's physical infrastructure is in a shambles, so that transnational conglomerates can bring us cheap goods to suppress inflation and bring these companies mega-profits, which they keep stored offshore to bypass taxation. They presently have $1.7 trillion in such profits. This in part has been caused by deficit spending and the creation of money and credit since August 15,1971, when the US left the gold standard.  It is not surprising as a result that 81% of the US economy is considered in poor shape and that the IMF fears a social explosion. You could call this a financial death spiral. There is no question the economy is moribund and the next stage could be dead in the water and that is after QE1 which saw $2.5 trillion enter the economy. The first installment of QE2 is in process and that $600 billion will grow to another $2.5 trillion, to be followed by Q3 and a further injection of another $2.5 trillion. There are those who say QE2 should be eliminated. We wonder if they realize that if it is, that the American economy, and most of the world's economy will collapse. If we had allowed a severe recession to play itself out in the early 1990s all this would have never happened, but that is not what Wall Street and banking wanted. We should have bitten the bullet three years ago, but the elitists wanted to take the problem at least one step further to be sure the final result would bring about one-world government. Readers, that is what this is really all about. More Here..

The Pension Conundrum? Posted: 25 Nov 2010 02:15 PM PST Via Pension Pulse. Stefania Moretti of QMI Agency reports in the Toronto Star, The pension conundrum: Recent calls to boost the Canada and Quebec Pension Plans will further burden business owners and push wages down as much as 2.5%, according to a new report.   The Canadian Federation of Independent Business said it has studied recent proposals from the Canadian Labour Congress and others to up CPP and QPP benefits and premiums.   The CLC proposal, it found, will force pay down as much as 2.5% in the long term. With Canadians more indebted than ever, retirement funding has become a hot-button issue, with many claiming the CPP and QPP aren’t enough to sustain quality of life, especially for private sector workers. The average retired Canadian man gets $6,800 a year from the CPP, while the average woman gets just $4,700.   Canada’s finance ministers have received a flurry of proposals on how to revamp the system ahead of their meeting on retirement income in December.   “One way or another everybody has to save more or we’ll be facing a crisis,” said Jeff Atkinson, a spokesperson for the CLC.   The CLC has proposed gradually doubling the benefits plan with premium increases of 0.47% in each of the next seven years, which works out to an additional $3.57 per week for a worker earning $47,200.   But employers, who already have the burden of funding employment insurance, would have to match the new premiums and that will drive wages and even job growth down, the CFIB said.   And the spending power that comes along with increased savings won’t be fully realized for 40 years, it said.   "The other important lesson of this exercise is to shed light on the fact that the bulk of the negative economic impacts would be the result of increases to employer-paid premium costs," said CFIB chief economist Ted Mallet.   Catherine Swift, president of the CFIB, said the real problem is the gap between private and public sector pensions.   "Taxpayers struggle to save for their own retirement, in part because they are paying dearly for the pensions of civil servants,” she said.   The CFIB says that if premiums must be raised, then they should be raised on the employee side only.   "As employers pay 60% of Employment Insurance premiums compared to 40% for employees, perhaps employees should pick up more of the cost of CPP, leaving employers' premiums at the current level,” she said.   CLC President Ken Georgetti said unionized employers and the public sector have done their part to ensure better retirement income and now it’s time for the private sector to step up to the plate.   “If you follow Swift’s argument to its illogical conclusion, she would argue that everybody should be as poor as the poorest private sector worker. That’s not the goal,” he said.   Employers who already offer a pension through an Registered Retirement Savings Plan could transfer some payments to the CPP since it is tax deductable and offers a better return for workers, he added. I have to agree with Ken Georgetti on this one. The goal isn't to impoverish everyone, but to increase retirement security among as many workers as possible in both the public and private sector. And here is an additional thought. Maybe the gap between private and public sector pensions exists because the latter are better managed. Yes, public sector pensions are more generous, but I happen to believe that for the most part, they're better managed plans. Finally, Susan Eng, VP Advocacy at CARP, sent me Joe Friesen's Globe and Mail article, Number of seniors living in poverty soars nearly 25% The number of seniors living in poverty spiked at the beginning of the financial meltdown, reversing a decades-long trend and threatening one of Canada’s most important social policy successes.   The number of seniors living below the low-income cutoff, Statistics Canada’s basic measure of poverty, jumped nearly 25 per cent between 2007 and 2008, to 250,000 from 204,000, according to figures released on Wednesday by Campaign 2000. It’s the largest increase among any group, and as the first cohort of baby boomers turns 65 next year, could place increased pressure on families supporting elderly parents.   Economists say women make up as much as 80 per cent of the increase in seniors poverty. Armine Yalnizyan, economist at the Canadian Centre for Policy Alternatives, said more women than men were living close to the poverty threshold before the financial crisis took hold in 2008, and, because their retirement savings tend to be smaller, were more likely to slip below the low-income cutoff. Men over 65 are also twice as likely as women over 65 to have a job. By January, 2009, there were 23,000 fewer women over 65 working than there were seven months earlier, while the number for men changed very little, Ms. Yalnizyan said.   “My guess is that the majority of women [who are still] working over 65 are not carrying on with their career, but trying to have a little more comfort in their lives. They were probably never too far above the poverty line, whatever line you pick. When those jobs are gone, more of them are struggling to make ends meet,” Ms. Yalnizyan said.   The rise in poverty among seniors poses particular problems for their adult children, who will be expected to bridge financial gaps for their parents while supporting their own families. This so-called “sandwich generation” is often caught with the twin pressures of having children in higher education and parents requiring additional care for failing health, according to Laurel Rothman, co-ordinator of the Campaign 2000 report card on child and family poverty.   She said the trend is particularly hard on new Canadians who have sponsored their parents to join them in Canada. Many of those parents have been able to work for only a few years in Canada before retirement, and so receive very little in Canadian pensions.   “In Montreal, Toronto and Vancouver, ethno-racial newcomers are particularly a concern,” Ms. Rothman said. “We see it all the time at Family Service Toronto, people who come here that are sponsored [by their family members]. It may be someone who puts in five or 10 years of work [in Canada], but they don’t get full Canada Pension Plan. ... And their cost of living has gone up.”   The jump in poverty among seniors is unusual because Canada’s success in tackling this issue has been cited as perhaps its single most successful policy intervention. According to figures cited in a 2009 Conference Board report, Canada’s rate of seniors poverty was as high as 36.9 per cent in 1971. The government, in an effort to tackle the problem, had a few years earlier introduced the Guaranteed Income Supplement and the Canada Pension Plan. By 2007, the rate of poverty among seniors had plummeted to 4.9 per cent, before rising to 5.8 per cent in 2008.   The Canadian data are at odds with what’s happened in the United States, where the poverty rate of 9.7 per cent among seniors did not change between 2007 and 2008, despite the financial collapse. Ms. Yalnizyan said that could be explained by the time lag between the beginning of the economic upheaval in the United States and its eventual impact on Canada.   The Campaign 2000 report also says 9.1 per cent of Canadian children were living in poverty in 2008, down slightly from the year before, but nowhere near the goal of eliminating child poverty set by Parliament in 1989. Susan Eng sent me her response to this article, which she sent to the Globe and Mail: The 25% increase in poverty among Canadians 65-plus is no surprise. That despite being warned, governments have not acted to prevent it is the real story.   The dramatic decline in seniors’ poverty rates over the last 20 years is largely attributed to the CPP, OAS and GIS. But the CPP has “matured” – retirees have just started receiving their full entitlements after 40 years in the workforce – so no more improvements from this source. OAS and GIS have not kept pace with the true increase in cost of living – the indexing formula excludes food and energy costs.   The differential impact on women is also not news. In and out of the work force with child rearing and caring for their parents or spouses, the women now over 65 had lower career earnings and more likely, no workplace pension.   Instead of helping, government rules actually exacerbate the problem. Applying late for OAS, GIS or CPP, limits you to11 months in retroactive payments – of your own money. Eighteen percent of women over 65 who live alone live in poverty. It didn’t help that the OAS spouse allowance for those aged 60-64 was not available to them.   Where’s the money to increase OAS and GIS to come from? The $2 billion saved when the Afghan mission ends, one or two jet fighters and their maintenance contracts, fundamental restructuring of health care delivery– take your pick. But the ignoring the issue won’t make it go away. Thanks for the story. Canada's finance ministers can no longer ignore this problem. There is no pension conundrum, only pension poverty which will get worse over the next decade. In fact, I had a conversation with a colleague of mine today and we chatted about how quantitative easing (QE) may be the only option, but it will exacerbate the divide between the financial economy and the real economy. It's great for banks, hedge funds, and private equity funds, but it remains to be seen whether the wealth will trickle down to the working class. In the meantime, pension poverty is getting worse and policymakers need to implement policies that will protect society's poor, elderly and most vulnerable from the vagaries of Casino Capitalism.

NY Times' Floyd Norris: Pondering the causes of gold fever Posted: 25 Nov 2010 12:25 PM PST By Floyd Norris The New York Times Thursday, November 25, 2010 http://www.nytimes.com/2010/11/26/business/26norris.html It is part religion, part politics. It is a way to voice a lack of confidence in the central banks of the world and a yearning for the world as it used to be. It is an investment that historically made sense when inflation was rampant, and yet it is soaring while the Federal Reserve frets about the threat of deflation. It is gold. It is tempting to view the soaring price of gold, which went above $1,400 an ounce earlier this month and remains close to that level, as a warning of imminent inflation. Such interpretations have fueled critiques of the Fed's latest round of monetary stimulus as being the forerunner of a collapse of the dollar. But I think it reflects first and foremost a dismay at the current state of the world economy, and a conclusion that the elites who are running it do not know what they are doing. ... Dispatch continues below ... 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 power plants 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 Or, as a friend of mine put it, You are buying gold because it is the alternative to this collection of stupid politicians around the world. It is not easy to have a calm discussion about gold. There are people who all but worship it and there are people who view it as a barbaric relic of an earlier era. If you are in the latter group, you probably look at it as just another commodity, whose price should reflect the demand for it in various industrial uses and for jewelry. That analysis basically prevailed in the 1990s. That was an era of growth around the world, and it was the time when central bankers convinced governments that they deserved independence in the pursuit of wise monetary policy. But the last decade was another matter, as was the late 1970s, when we had the last explosive move for gold bullion. Then the problem appeared to be runaway inflation. Now the problem seems to be perpetual weakness in rich economies that have been hobbled by debt foolishly taken on by people from bankers to subprime home buyers who had one thing in common: a belief that the risk of something going very wrong was all but nonexistent. The problems of 1980 and 2010 manifested themselves differently, but they led to the same conclusion: that the modern monetary system -- called "fiat money" by critics to emphasize that nothing real stands behind the value of currencies -- does not work. Gold is the alternative. You could argue that having gold behind a currency is also a form of fiat, that gold should be worth its value as a commodity rather than seen as a great and perpetual store of value. After all, gold was a very bad investment for 20 years, from 1980 to 2000. And why should the world decide that something found in South Africa is more valuable than a resource found elsewhere? One advantage of gold, of course, is that it does not deteriorate with age. Gold mined a thousand years ago may be in that ring on your finger. Other things do not last. A banana standard might seem like a wonderful idea in Central America, but it would not work. A disadvantage of gold as an investment is that it costs money to store and produces no income. But who cares these days? The yield on short-term Treasuries is almost nothing. To get any kind of interest rate, you have to take some real risks of the type that blew up so spectacularly in 2008 and 2009. People my age can recall when the dollar was worth precisely one 35th of an ounce of gold. But that was near the end of the era when currencies were tied to gold in any way. The United States government had made it illegal for us to own gold, for fear we would buy it and drive up the price. There was a lot of inflation between the time Franklin Roosevelt set that ratio and the time that Richard Nixon severed the link, but the stated gold price remained the same. During the last gold boom, there were other ways to bet on the continuing failure of American political leadership. One could buy German marks, Swiss francs, or Japanese yen. All those economies appeared to be much better managed than those of the United States or Britain. Now there are fewer alternatives. Those who think the big inflation is coming in the United States do not think we will suffer alone. If the Chinese renminbi were a freely traded currency, people would flood into it and drive the price up. But of course China is determined not to allow that, and the rest of the world appears powerless to do anything but mutter about how unfair it all is. The international furor over the Fed's quantitative easing shows how sensitive countries are to the prospect of other currencies losing value against their currency. It is not easy to conjure up a situation in which the dollar plunges for a prolonged period against the euro or the yen. In fact, the opposite has happened since the Fed spelled out its plans. There is a real threat of inflation in China and some other developing countries, but the rest of us can only wish we were so lucky. I say lucky because there is a case to be made for the current desirability of rising prices. Imagine for a moment that asset prices in the United States, and Ireland and Spain, for example, rose sharply over the next few years, as measured by euros and dollars. Imagine that incomes rose much more slowly, so that real inflation-adjusted incomes fell even though nominal incomes rose. In other words, imagine the late 1970s came back. We used to call that period "stagflation," and no one has fond memories of it. Those of us with money would be poorer, because the money would buy less. It would be even worse if we had lent the money for a number of years at the current low interest rates. But the borrowers would be much better off, and just now they are the ones in the worst trouble. People with homes that now seem to be hopelessly underwater would find they could sell and pay off the mortgage. Banks would discover they had fewer bad loans than they thought they did. Unemployed people could afford to move in search of work. Nominal gross domestic product would rise sharply in all of those countries, even if real GDP rose more slowly. The debt-to-GDP ratios that are now causing so much hand-wringing would be reduced, not by budget surpluses but by devalued debt. Saying that a lot of people would benefit from something happening is not the same as explaining how it would happen. Just now, deflation looks more ominous in many Western countries. Ireland is planning to cut the pay of public workers, again, and fiscal tightening -- something needed to fight inflation, not deflation -- is the order of the day in many countries. We may think central banks blew it in the last decade, but we apparently will not do anything to help them in their current struggle. The plea by Ben Bernanke, the Fed chairman, for the government to find a way to invest more now while cutting spending later received little attention because the idea appeared to be a political impossibility. It is distrust of elites that feeds some of the current gold fever, and that helps explain why it may make sense for one company that is promoting gold as an investment to hire G. Gordon Liddy as a spokesman. This is a man whose fame comes from committing the Watergate burglary on behalf of the very president who severed the last ties binding the dollar to gold, and is therefore vilified by gold bugs. But Mr. Liddy has an anti-establishment tint, and the intended audience is not committed gold bugs but instead worried and suspicious people. They may not be believers in gold, but they know all too well what can go wrong with investments in stocks and real estate. Over the last four decades, the only ones in which gold was freely traded, gold proved to be a good buy precisely when it appeared the system was failing. In the 1970s, gold zoomed upward from artificially low levels, while stocks did not come close to keeping up with inflation. In the 1980s and 1990s, stocks rose at rates greater than 15 percent a year, and gold went down. In the first decade of this century, stocks declined while gold rose at a compound rate of almost 15 percent a year. So far this year, both gold and stocks are up. That combination is unlikely to last out the current decade. Betting that $1,400 gold will soon be $1,800 gold or $2,500 gold is basically a bet that the West really is in permanent decline this time, with countries facing the prospect of bankruptcy or sharp reductions in spending on everything from schools to pensions. Or perhaps all of the above. Let's hope the bet is wrong. * * * 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 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

NY Times' Floyd Norris: Pondering the causes of gold fever Posted: 25 Nov 2010 12:25 PM PST By Floyd Norris The New York Times Thursday, November 25, 2010 http://www.nytimes.com/2010/11/26/business/26norris.html It is part religion, part politics. It is a way to voice a lack of confidence in the central banks of the world and a yearning for the world as it used to be. It is an investment that historically made sense when inflation was rampant, and yet it is soaring while the Federal Reserve frets about the threat of deflation. It is gold. It is tempting to view the soaring price of gold, which went above $1,400 an ounce earlier this month and remains close to that level, as a warning of imminent inflation. Such interpretations have fueled critiques of the Fed's latest round of monetary stimulus as being the forerunner of a collapse of the dollar. But I think it reflects first and foremost a dismay at the current state of the world economy, and a conclusion that the elites who are running it do not know what they are doing. ... Dispatch continues below ... 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 power plants 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 Or, as a friend of mine put it, You are buying gold because it is the alternative to this collection of stupid politicians around the world. It is not easy to have a calm discussion about gold. There are people who all but worship it and there are people who view it as a barbaric relic of an earlier era. If you are in the latter group, you probably look at it as just another commodity, whose price should reflect the demand for it in various industrial uses and for jewelry. That analysis basically prevailed in the 1990s. That was an era of growth around the world, and it was the time when central bankers convinced governments that they deserved independence in the pursuit of wise monetary policy. But the last decade was another matter, as was the late 1970s, when we had the last explosive move for gold bullion. Then the problem appeared to be runaway inflation. Now the problem seems to be perpetual weakness in rich economies that have been hobbled by debt foolishly taken on by people from bankers to subprime home buyers who had one thing in common: a belief that the risk of something going very wrong was all but nonexistent. The problems of 1980 and 2010 manifested themselves differently, but they led to the same conclusion: that the modern monetary system -- called "fiat money" by critics to emphasize that nothing real stands behind the value of currencies -- does not work. Gold is the alternative. You could argue that having gold behind a currency is also a form of fiat, that gold should be worth its value as a commodity rather than seen as a great and perpetual store of value. After all, gold was a very bad investment for 20 years, from 1980 to 2000. And why should the world decide that something found in South Africa is more valuable than a resource found elsewhere? One advantage of gold, of course, is that it does not deteriorate with age. Gold mined a thousand years ago may be in that ring on your finger. Other things do not last. A banana standard might seem like a wonderful idea in Central America, but it would not work. A disadvantage of gold as an investment is that it costs money to store and produces no income. But who cares these days? The yield on short-term Treasuries is almost nothing. To get any kind of interest rate, you have to take some real risks of the type that blew up so spectacularly in 2008 and 2009. People my age can recall when the dollar was worth precisely one 35th of an ounce of gold. But that was near the end of the era when currencies were tied to gold in any way. The United States government had made it illegal for us to own gold, for fear we would buy it and drive up the price. There was a lot of inflation between the time Franklin Roosevelt set that ratio and the time that Richard Nixon severed the link, but the stated gold price remained the same. During the last gold boom, there were other ways to bet on the continuing failure of American political leadership. One could buy German marks, Swiss francs, or Japanese yen. All those economies appeared to be much better managed than those of the United States or Britain. Now there are fewer alternatives. Those who think the big inflation is coming in the United States do not think we will suffer alone. If the Chinese renminbi were a freely traded currency, people would flood into it and drive the price up. But of course China is determined not to allow that, and the rest of the world appears powerless to do anything but mutter about how unfair it all is. The international furor over the Fed's quantitative easing shows how sensitive countries are to the prospect of other currencies losing value against their currency. It is not easy to conjure up a situation in which the dollar plunges for a prolonged period against the euro or the yen. In fact, the opposite has happened since the Fed spelled out its plans. There is a real threat of inflation in China and some other developing countries, but the rest of us can only wish we were so lucky. I say lucky because there is a case to be made for the current desirability of rising prices. Imagine for a moment that asset prices in the United States, and Ireland and Spain, for example, rose sharply over the next few years, as measured by euros and dollars. Imagine that incomes rose much more slowly, so that real inflation-adjusted incomes fell even though nominal incomes rose. In other words, imagine the late 1970s came back. We used to call that period "stagflation," and no one has fond memories of it. Those of us with money would be poorer, because the money would buy less. It would be even worse if we had lent the money for a number of years at the current low interest rates. But the borrowers would be much better off, and just now they are the ones in the worst trouble. People with homes that now seem to be hopelessly underwater would find they could sell and pay off the mortgage. Banks would discover they had fewer bad loans than they thought they did. Unemployed people could afford to move in search of work. Nominal gross domestic product would rise sharply in all of those countries, even if real GDP rose more slowly. The debt-to-GDP ratios that are now causing so much hand-wringing would be reduced, not by budget surpluses but by devalued debt. Saying that a lot of people would benefit from something happening is not the same as explaining how it would happen. Just now, deflation looks more ominous in many Western countries. Ireland is planning to cut the pay of public workers, again, and fiscal tightening -- something needed to fight inflation, not deflation -- is the order of the day in many countries. We may think central banks blew it in the last decade, but we apparently will not do anything to help them in their current struggle. The plea by Ben Bernanke, the Fed chairman, for the government to find a way to invest more now while cutting spending later received little attention because the idea appeared to be a political impossibility. It is distrust of elites that feeds some of the current gold fever, and that helps explain why it may make sense for one company that is promoting gold as an investment to hire G. Gordon Liddy as a spokesman. This is a man whose fame comes from committing the Watergate burglary on behalf of the very president who severed the last ties binding the dollar to gold, and is therefore vilified by gold bugs. But Mr. Liddy has an anti-establishment tint, and the intended audience is not committed gold bugs but instead worried and suspicious people. They may not be believers in gold, but they know all too well what can go wrong with investments in stocks and real estate. Over the last four decades, the only ones in which gold was freely traded, gold proved to be a good buy precisely when it appeared the system was failing. In the 1970s, gold zoomed upward from artificially low levels, while stocks did not come close to keeping up with inflation. In the 1980s and 1990s, stocks rose at rates greater than 15 percent a year, and gold went down. In the first decade of this century, stocks declined while gold rose at a compound rate of almost 15 percent a year. So far this year, both gold and stocks are up. That combination is unlikely to last out the current decade. Betting that $1,400 gold will soon be $1,800 gold or $2,500 gold is basically a bet that the West really is in permanent decline this time, with countries facing the prospect of bankruptcy or sharp reductions in spending on everything from schools to pensions. Or perhaps all of the above. Let's hope the bet is wrong. * * * 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 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

Is A Twenty Year Low On The Real (Not Nominal) S&P Approaching? Posted: 25 Nov 2010 12:06 PM PST The fact that looking at market performance on a nominal basis (i.e., unadjusted for the decline in purchasing power, or the increase in hard asset prices) is foolish, has recently been understood by even some of the most garish financial tabloids. That said, Ben Bernanke could not be happier if the general public remained broadly dumb about the so-called Zimbabwe phenomenon: i.e. when the stock market goes up by a billion percent, yet purchasing power drops by a trillion. Which is why today we present a visual projection by Sean Corrigan of Diapason Securities, which looks at the S&P on a trade weighted basis, and which looks at the various market cycles not so much from a stock/PE boom-bust basis, but from the view of monetary strength of the underlying currency backing the US stock market, namely the dollar. Corrigan says: "Remember that it never does to get carried away by nominal prices, meaning one should always try to adjust for either or both of currency changes and alterations in the purchasing power of the cash in which an asset is quotes. On that first reckoning, asll you triskaidekaphobes might want to review the prospects for the S&P500, where a 50% loss of dollar-adjusted value over the next year or two, would just be neurologically exact for words." Why 50%? As the chart below shows, a 50% real retracement in stock prices is precisely where the downward channel of the lower lows of the S&P would take us. What that wouold mean is that by October 2012, the S&P will hit approximately a 20 year low. Considering all the monetary fornication that the chairman has embarked on vis-a-vis the middle class and the US currency, we will be lucky if in 2 years the market IS down just 50% adjusted for the amount of KY poured down (or as the case may be, up) the appropriate middle class orifice. What is most  interesting, as Corrigan highlights, is that over the past 10 years the standard bubble/burst cycle, adjusted for trade weighted terms, is one of 50% moves pretty much consistently. Of course as even the most introductory classes demonstrate, in the long-run a sequence of 50% up/down moves eventually tapers off to asymptote (i.e., zero). Tech - August 2000 +54.8% Gulf/WorldCom - March 2003 -46% SubPrime/CDO - May 2007 +49% Lehman/AIG - February 2009 -49.1% QE-China - April 2010 +45/3% EM/Eurozone/US Muni - 2012/2013 -50%? And the pretty chart to go with it all:

Gold fever: Pondering the causes Posted: 25 Nov 2010 11:48 AM PST by Floyd Norris Thursday, November 25, 2010 (The New York Times) — It is part religion, part politics. It is a way to voice a lack of confidence in the central banks of the world and a yearning for the world as it used to be. It is an investment that historically made sense when inflation was rampant, and yet it is soaring while the Federal Reserve frets about the threat of deflation. It is gold. It is tempting to view the soaring price of gold, which went above $1,400 an ounce earlier this month and remains close to that level, as a warning of imminent inflation. Such interpretations have fueled critiques of the Fed's latest round of monetary stimulus as being the forerunner of a collapse of the dollar. But I think it reflects first and foremost a dismay at the current state of the world economy, and a conclusion that the elites who are running it do not know what they are doing. Or, as a friend of mine put it, "You are buying gold because it is the alternative to this collection of stupid politicians around the world." … Now the problem seems to be perpetual weakness in rich economies that have been hobbled by debt foolishly taken on by people from bankers to subprime home buyers who had one thing in common: a belief that the risk of something going very wrong was all but nonexistent. … One advantage of gold, of course, is that it does not deteriorate with age. Gold mined 1,000 years ago may be in that ring on your finger. Other things do not last. A banana standard might seem like a wonderful idea in Central America, but it would not work. … People my age can recall when the dollar was worth precisely one thirty-fifth of an ounce of gold. But that was near the end of the era when currencies were tied to gold in any way. The United States government had made it illegal for us to own gold, for fear we would buy it and drive up the price. There was a lot of inflation between the time Franklin Roosevelt set that ratio and the time that Richard Nixon severed the link…. The international furor over the Fed's quantitative easing shows how sensitive countries are to the prospect of other currencies losing value against their currency. It is not easy to conjure up a situation in which the dollar plunges for a prolonged period against the euro or the yen. In fact, the opposite has happened since the Fed spelled out its plans. There is a real threat of inflation in China and some other developing countries, but the rest of us can only wish we were so lucky. … I say lucky because … borrowers would be much better off, and just now they are the ones in the worst trouble. People with homes that now seem to be hopelessly underwater would find they could sell and pay off the mortgage. Banks would discover they had fewer bad loans than they thought they did. Unemployed people could afford to move in search of work. … Over the last four decades, the only ones in which gold was freely traded, gold proved to be a good buy precisely when it appeared the system was failing. [source] RS View: A reasonably good article as a starting point, however, it falls into the typical trap of looking at the world largely from a U.S.-centric economic perspective and therefore fails to recognize or suggest that, the newly fostered gold market freedoms unfolding in important emerging economies (i.e., China) can be the driving force for escalating gold despite whatever happens to be going on within our own national borders. Gold, after all, is a global market, more so than any other.

In The News Today Posted: 25 Nov 2010 11:31 AM PST View the original post at jsmineset.com... November 25, 2010 01:59 PM Jim Sinclair’s Commentary This is a total Western world currency problem whose basis is still not fully discussed. The essence of the problem is as much overspending and debt, but media forgets, facilitated by the national OTC derivative camouflage. QE will go to infinity and the race to the bottom is going to get UGLY. Although Nigel Farage is correct, he has no concept of what doing the right thing will result in immediately. There is no practical way out of this. I have told you that for 8 years and nothing has changed. Gold is the only currency that is going to survive this, defined as the preserving of buying power, as it always did throughout monetary history. ‘The Euro Game Is Up! Who the hell do you think you are?’ – Nigel Farage MEP   Jim Sinclair’s Commentary Step back a few months. Does this remind you of a period called the Greek Crisis? It is so similar tha...

Matt Taibbi: It's Rigged, Everyone Is Insider Trading Posted: 25 Nov 2010 08:09 AM PST Is the Game Rigged? Matt Taibbi Talks About Insider Trading on Wall Street @ Yahoo! Video Companies Dropping The Dollar? Caterpillar to Issue Yuan-Denominated Bond This posting includes an audio/video/photo media file: Download Now

Gold Sticker Shock and Silver Surge Posted: 25 Nov 2010 06:34 AM PST Price is an interesting element of the marketplace. At one price, a product may be a perceived bargain, yet at another still similar price, the same product would be a perceived rip-off. As you walk through a supermarket, it becomes evident the tricks that certain prices can play on your mind. $1.99 looks far less expensive than $2, even if the difference is only one cent. Ten for $10 deals are more likely to drive more sales volume, even if the normal market price is actually $1 each. However, beyond price psychology, we also have the sticker shock effect. While few of us would think twice before placing a $5 item in our cart, most everyone would second guess their buying habits at a $10,000 price point. As prices rise higher, we seek out alternatives, even if the higher price is still a relative bargain. Gold's Relativity to Silver From the perspective of consumption, but not investment, gold seems to have hit its upper bound. An article in the Wall Stre...

Dollar vs. Emerging Currencies is a Boon for Silver Posted: 25 Nov 2010 06:33 AM PST Any careful observer of the Federal Reserve should be slowly coming to the conclusion that Bernanke is off his game plan. In the past few weeks and months, Bernanke has repeated before Congress that his dual mandate is to provide for slow and gradual recovery, but low inflation and full employment. Recently though, Bernanke is on a new tangent, a semi-mercantilist endeavor to lower the value of the US dollar against emerging economies. As if the failure of the stimulus package and loose monetary policy weren't already clear from the sheer number of jobless and the general stagnation in the US economy, it is now clearer than ever that the Fed is fighting a moving target. Spending didn't get the economy moving, negative real interest rates are engaging only simple speculation in financial markets, and now Bernanke is searching for a new outlet: international currencies. In a monthly briefing to the House Financial Services Subcommittee, Bernanke alleged that emer...

Holiday Squeeze on the Dollar, Gold & Stocks Posted: 25 Nov 2010 06:23 AM PST The past week and a half has been as choppy as it gets for the stocks market. Thankfully the herd mentality (fear & greed) stays the same. Understanding what others think and feel when involved in the market is one of the keys to making money consistently from the market. The crazy looking chart below I will admit is a little tough on the eyes, and I should have used red and green for holiday colors but green just was not going to work today so bear with me. Market Internal Indicators – 10 minute, 7 day chart This is a simple chart to read if you understand how to trade these market internal indicators (NYSE volume ratio, NYSE Advance/Decline line, and Total Put/Call ratio). It shows and explains how I get a read on the overbought/sold conditions in the market. There are several other criteria needed to pull this trade off but it is these charts which tell me to start getting ready to take partial profits, buy or take short positions. The top section shows the N...

LGMR: Gold – "Buy on Dips" Advised as Irish Crisis Tips Contest from Dollar to Euro Posted: 25 Nov 2010 06:17 AM PST London Gold Market Report from Adrian Ash BullionVault 07:05 ET, Thurs 25 Nov. Gold – "Buy on Dips" Advised as Irish Crisis Tips "Ugly Contest" from Dollar to Euro THE PRICE OF WHOLESALE gold continued to hold steady above $1370 per ounce for US savers on Thursday, trading at two-week highs vs. the Euro as world stock markets gently extended yesterday's sharp rally. Crude oil pushed higher to $84 per barrel. Like gold, silver prices held steady, trading around $27.50 per ounce. "Gold caught it breath" on Wednesday, says Swiss refiner MKS's finance division in a note. "The gold price tried a number of times to break through $1377, but there were some very large offers [to sell] there." "After two down weeks, is this a sell on rally or buy on dip?" asks Russell Browne at bullion bank Scotia Mocatta in his latest technical analysis. "We believe the risk is higher, with only a move below $1330 causing significant liquidation" in gold bullion and futures contracts. Over ...

Embry expects a mania in precious metal mining shares Posted: 25 Nov 2010 04:52 AM PST 12:46p ET Thursday, November 25, 2010 Dear Friend of GATA and Gold (and Silver): Interviewed by Eric King of King World News, Sprott Asset Management's chief investment strategist, John Embry, predicts that despite that constant disparagement of gold and silver by respectable market analysts, the need of governments to prevent debt implosions will force them to keep printing money and thereby keep gold going up in terms of that money. That, Embry says, will induce a mania in the precious metals mining shares. An excerpt from the interview has been posted at the King World News blog, headlined "There Will Be a Mania in Gold and Silver Shares," and you can find it at King World news here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/25_J... Or try this abbreviated link: http://bit.ly/fUCpUi 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

Despite A Crumbling Europe, Goldman Sticks With Its 12 Month $1.55 EURUSD Forecast Posted: 25 Nov 2010 03:41 AM PST Goldman's Thomas Stolper joins Erik Nielsen with an updated, and painfully bullish, Euro forecast: "our baseline is that these risks will not escalate much further." As Stolper is the guy who has successfully top.ticked.every.single.move in FX, it is time to call the undertaker (the profit margins on a coffin the size of Europe will be sufficiently high no matter the input cost of lumber). Not surprisingly then Stolper follows up: "we believe EUR/$ remains very much on track for the projected trajectory of 1.40 in 3mths as well as 1.50 and 1.55 in 6 and 12 months." Recall that Stolper came out with his upward revised EURUSD forecast just before the pair topped out in the low 1.40s (which was shortly after he scrapped his 1.15 target just after the eurozone stopped its implosion last time around after the Stress Test lie and QE2 rumors started). In other words, we just doubled down on our bet that John Taylor is once again spot on. What is unsaid here is that Goldman expects the world to start pricing in QE3 imminently, and punish the USD: "one question we face very often is about the viability of Eurozone growth with EUR/$ at 1.55. Our answer is that we really believe in broad USD weakness." At the end of the day, as we have claimed for over a year, the key dynamic is between the race of USD and EUR to devaluation: on one hand via outright currency printing and on the other via a continental disintegration. The one thing that many are forgetting, is that the faster a European crisis unwinds, the bigger the European banks' funding needs for dollars due to record FX asset-liability mismatch (and now, due to the dollar serving as a carry funding currency). In other words, the worse Europe gets, the doubly-faster that the Fed will need to print reserves to keep the dollar low. All that is a long-winded way to say that we anticipate Stolper will revise his EURUSD forecast lower within a month, once Goldman's ex-prop-now-"client facing" desks have accumulated enough USD positions. Eurozone Risks The primary market focus currently is on Eurozone sovereign risks again. Our baseline is that these risks will not escalate much further. Specifically we believe that Spain will not need a bail-out as Francesco Garzarelli and Erik Nielsen have continued to highlight. Should this assumption turn out to be right, the EUR will likely strengthen again, otherwise we could see another sustained broad decline. In any case the current drop in EUR was not really a surprise. For example we highlighted since the summer in our FX research that the implementation phase of European fiscal tightening and further reforms will likely lead to renewed tensions and pressures on the Euro. Though to be fair, we initially thought this would materialise earlier.   At the latest forecast revisions in early October, we explicitly mentioned the risk of a temporary dip below 1.30 in EUR/$ on European sovereign issues and broader risk aversion. However, our baseline is that sovereign stress abates fairly quickly as otherwise our view of a relatively quick move back up may not materialise. And these fiscal worries are a powerful force, which even managed to temporarily overcome the risk correlations as we could see at the beginning of 2010, when stocks did well globally, the correlations in daily returns remained unchanged but where the sovereign concerns in Europe led to a strong temporary EUR down trend nevertheless.   A related risk is that fiscal tightening leads to much weaker growth performance in the Eurozone, but there again Germany acts as an anchor. With very little fiscal consolidation needed the overall fiscal tightening in the Eurozone will be far less than in the peripheral countries.   On the positive side, the latest round of PMIs suggests the core of the Eurozone may continue to show upside surprises, which over time would likely help alleviate sovereign stress and support the case for tighter ECB policy.   Overall, we believe EUR/$ remains very much on track for the projected trajectory of 1.40 in 3mths as well as  1.50  and 1.55 in 6 and 12 months. Of course, the biggest near term risk is further deepening of the Eurozone sovereign crisis and there is no doubt that further EUR/$ weakness would be the result. On the other hand, if things calm down again, opportunities for tactical long positions look increasingly good.   Finally, one question we face very often is about the viability of Eurozone growth with EUR/$ at 1.55. Our answer is that we really believe in broad USD weakness and hence the trade weighted appreciation of the EUR will be fairly limited if our forecasts are correct.  And some more: Our EUR/$ Baseline Forecast Sometimes we find it useful to look at an ideal USD downside scenario before comparing our forecasts with this benchmark. This approach helps looking beyond all the short term factors dominating the headlines and to cut out some market noise.   Starting with continued strong correlations to risky assets, it is pretty clear that the USD tends to weaken when risky assets perform well and vice versa. This in turn suggests that USD weakness requires a clearly positive outlook for cyclical assets. One of the reasons why this correlations still holds in our view is that a large number of foreign investors in US equities are currency hedged, whereas US investors in foreign stocks rather tend to be unhedged. As a result a global risky asset rally tends to translate into asymmetric flows from foreign investors who end up being under hedged and need to sell more USD against their home currency. A positive global decoupling scenario with persistent US imbalances is pretty close to such a weak USD scenario from a risk correlation point of view.   The hedging asymmetries also suggest that a scenario where the US is clearly in the process of adjusting the structural imbalances would ultimately be USD positive as equity investors may start reducing their hedging asymmetries. This in turn would lead to sizable USD buying.   Finally, looking at the policy mix, tighter fiscal and easier monetary policy in the US than in most other countries would also help reduce support for the USD.   Our current macro forecasts pretty much tick all the boxes. We expect a continued global recovery with still persistent imbalances in the US and easier monetary policy by the Fed than in most other places. On the basis of this global view USD weakness remains the most likely trend to dominate FX markets. As part of a trade weighted Dollar decline we would certainly expect the Euro to join in. And in fact, many of the macro factors in the US seem to be the other way round in the Eurozone, including tighter monetary policy and a positive risk correlation for the currency.

John Embry - There Will Be a Mania in Gold & Silver Shares Posted: 25 Nov 2010 03:30 AM PST With gold settling around $1,375 and silver holding $27.50, King World News interviewed John Embry, Chief Investment Strategist at Sprott Asset Management. When asked about the negativity surrounding the advance in gold and the disbelief in the upward price movement Embry said, "I think it's very simple, the mainstream press is so negative on gold, and you get all of these high profile commentators like Dennis Gartman and they are always out saying the same thing. They are just sort of putting out the idea that, 'Oh yeah, it may go a little bit higher BUT then it's going to get smashed.'" This posting includes an audio/video/photo media file: Download Now

Rosenberg: "I Think The Dramatic Fiscal Tightening We Are Seeing In Ireland And Others Is Insane" Posted: 25 Nov 2010 02:39 AM PST Rosie enters the "future of the euro" speculation race, and sees a "devastating deflationary shock" when Europe finally accepts the inevitable: "U.S. companies would likely confront a huge appreciation in the dollar, which would cut into their foreign-derived earnings base. Commodity prices would undoubtedly correct and safe-haven flows would certainly redress the loonie’s overvaluation gap. Treasuries would rally big-time." Stocks, of course, would plummet, and "Gold would remain bid — yesterday’s rally in the face of the USD rally is a case in point." On the other hand, the fact that we are starting to see traces of Krugman in Rosie's thinking is very. very worrisome. SCENARIO BUILDING — KEY RISKS AHEAD Yesterday’s very weak U.S. new home sales data underscore the mixed nature of the other data releases. That said, Q4 real GDP in the U.S. is now likely to come in a tad better than I expected. While the U.S. consumer seems to have some legs as year-end approaches, my worry list for 2011 has not changed. Next year, even assuming the Bush tax cuts are extended, fiscal policy at the federal level will withdraw five-tenths of a percentage point from real GDP, at the least. Furthermore, closing the massive budget gaps at the state and local level will withdraw a further 1.5 percentage points from GDP. Again, this is a conservative estimate but a total of two-percentage points of fiscal drainage with questionable offsets from the other sectors of the economy. Then, of course, in Europe, there is fiscal tightening and rising risk premia associated with potential sovereign defaults. Those developments will have a negative impact on exports too. Also, the response to exchange rate manipulation in Asia could well draw higher tariffs, and the resulting trade war would impact asset prices and the economic outlook that much further. I think the dramatic fiscal tightening we are seeing in Ireland and others is insane and I wonder how a new government in early 2011 is going to react. Spanish bond spreads are behaving like Ireland did precisely six-months ago when Greece was getting bailed out (it’s not really a bailout — the stringent strings attached are like a hangman’s rope). Everybody seems to believe the euro is sacrosanct but this was also the view around the Argentina currency board nearly a decade ago, the country ultimately devalued in order to reflate its economy and pay off its debts in debased currency. After the 10-year currency convertibility plan was abandoned in early 2002, the Argentinean peso depreciated 80%, which in turn paved the way for massive trade surpluses, and from 2003 to 2007, real GDP expanded at a 9% annual rate, and real wages rose by nearly 5% per year. Growth ensued. Memories faded. Sweden, in the early 90s, is another example, and the reason Iceland no longer makes the news is because the krona has been devalued 60%. The end-game as I see it is that some of these peripheral EMU countries leave the union, go back to their own currency so they can reclaim control over their monetary policy and pay their debts in devalued punts, drachmas and pesetas. These peripheral EMU countries need to reflate but are being forced to do the exact opposite by being linked to a currency union. Other countries, such as Germany and the UK, that have big banks that own a ton of these peripheral European bonds will simply see their governments issue debt to cover the losses, either in part or whole (Merkel will see to it that in Germany’s case, it will be the former) in their financial sector. We’ll look back at this like we did Argentina and Russia ... with faded memories. But if it plays out like this, it would be a devastating deflationary shock for the global economy, for at least a few months. And, U.S. companies would likely confront a huge appreciation in the dollar, which would cut into their foreign-derived earnings base. Commodity prices would undoubtedly correct and safe-haven flows would certainly redress the loonie’s overvaluation gap. Treasuries would rally big-time. I'd welcome any responses/views to this thesis. Call it scenario building, but our pro-CAD and pro-commodity views are at stake. Gold would remain bid — yesterday’s rally in the face of the USD rally is a case in point. And a broader catch up on key economic themes: WHILE YOU WERE SLEEPING Another mixed start to the day with most European bourses flashing red while Asia is mostly in the green column. Bond yields are backing up, especially in the European periphery. While there is talk now of boosting the European rescue fund, size doesn’t matter — these are loans, not gifts, and do not solve the problem of excessive debt burdens, exacerbated by fiscally-induced deflationary pressures. Are these aid packages working? The short answer is no. The yield on a 10-year Greek bond has ratcheted all the way up to 11.93% — it was 8.96 % just prior to the IMF-EU rescue plan unveiled in early May. At these levels, how could Greece ever fund itself? Meanwhile, Irish 10-year bond yields are at their highest level since the EMU was created in 1999 (9.1%) and contagion risks are underscored by the fact that even Spanish bond yields have now risen in each of the past eight sessions. The U.S. dollar continues to firm up in this environment, ditto for the yen and gold, as investors take cover in the “safe havens”. It was light on the foreign data docket but we did see some oomph in the U.K. retail sales data for November. If anyone is keeping a scorecard on QE2, it’s not looking too good at the moment. No stimulus from the U.S. dollar, which is strengthening (thank you, Ireland). The equity market is consolidating, and Treasury yields have backed up sharply with the 10-year note seemingly poised to re-test the 3% threshold — when the specific objective was to reduce market interest rates. It may be time to go back to the drawing board. Indeed, have a look at this article in today’s NYT business section (Fed Considered Setting Target for Interest Rates on Some Bonds).

Reg Howe: Three years of contraction and concentration in gold derivatives Posted: 25 Nov 2010 02:30 AM PST 10:24a ET Thursday, November 25, 2010 Dear Friend of GATA and Gold (and Silver): Precious metals market analyst and gold price suppression litigator Reginald H. Howe reported this week on the latest gold and silver derivatives report published by the Bank for International Settlements. Howe writes that gold derivatives continue to decline and become more concentrated in the hands of U.S. commercial banks J.P. Morgan Chase and HSBC, a trend Howe finds consistent with the withdrawal of central banks from gold lending. But the situation with silver is less clear. Howe's analysis is titled "Gold Derivatives: Three Years of Contraction and Concentration" and you can find it at his Internet site, the Golden Sextant, here: http://www.goldensextant.com/commentary37.html CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. 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 power plants 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 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 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

Wouldn't China love to trade U.S. Treasuries for U.S. gold? Posted: 25 Nov 2010 01:47 AM PST PBOC Researcher Calls on U.S. to Sell Gold to Finance Deficit By Feiwen Rong Bloomberg News Wednesday, November 24, 2010 http://www.bloomberg.com/news/2010-11-25/pboc-researcher-calls-on-u-s-to... BEIJING -- The United States should cut its government spending and sell some gold reserves to balance its budget and fund its recovery, the People's Daily overseas edition reported, citing Xia Bin, an adviser to the People's Bank of China. The U.S. has to resolve its "twin deficits" in the government budget and the current account, Xia was quoted as saying. Three ways that may help the U.S. achieve that target include reducing military expenses, selling part of its gold reserves, and relaxing some export limits on technology, he said. "The U.S. has more than 8,000 tons of gold reserves. Why can't it sell some of it since the country wants to raise funds for economic recovery but doesn't want to add more burden to the fiscal deficit?" Xia told the newspaper. He didn't mention whether China would be willing to purchase any gold from the U.S. .. Dispatch continues below ... 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 China ranks as the world's largest foreign holder of U.S. Treasuries, with $883.5 billion as of Sept. 30, according to the U.S. Treasury Department. China should raise its gold holdings and its 1,054 tons of reserves are inadequate compared with the 8,133 tons held by the U.S. and 3,408 tons by Germany, Meng Qingfa, a researcher at the China Chamber of International Commerce, said on Oct. 27. The U.S. won't be able to get to the bottom of the problem if the government keeps relying on printing money, Xia said. "The financial market in the U.S. is not short of liquidity, and the money can't get into the real economy," he said. Expanding money supply may not be the answer in the U.S. as the high unemployment there is a structural instead of a liquidity issue, Xia said. The Federal Reserve said Nov. 3 it will buy an additional $600 billion of Treasuries through June. Policy makers, setting a pace of about $75 billion of purchases a month, "will adjust the program as needed," the Fed's Open Market Committee said in a statement in Washington. * * * 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

Wouldn't China love to trade U.S. Treasuries for U.S. gold? Posted: 25 Nov 2010 01:47 AM PST PBOC Researcher Calls on U.S. to Sell Gold to Finance Deficit By Feiwen Rong Bloomberg News Wednesday, November 24, 2010 http://www.bloomberg.com/news/2010-11-25/pboc-researcher-calls-on-u-s-to... BEIJING -- The United States should cut its government spending and sell some gold reserves to balance its budget and fund its recovery, the People's Daily overseas edition reported, citing Xia Bin, an adviser to the People's Bank of China. The U.S. has to resolve its "twin deficits" in the government budget and the current account, Xia was quoted as saying. Three ways that may help the U.S. achieve that target include reducing military expenses, selling part of its gold reserves, and relaxing some export limits on technology, he said. "The U.S. has more than 8,000 tons of gold reserves. Why can't it sell some of it since the country wants to raise funds for economic recovery but doesn't want to add more burden to the fiscal deficit?" Xia told the newspaper. He didn't mention whether China would be willing to purchase any gold from the U.S. .. Dispatch continues below ... 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 China ranks as the world's largest foreign holder of U.S. Treasuries, with $883.5 billion as of Sept. 30, according to the U.S. Treasury Department. China should raise its gold holdings and its 1,054 tons of reserves are inadequate compared with the 8,133 tons held by the U.S. and 3,408 tons by Germany, Meng Qingfa, a researcher at the China Chamber of International Commerce, said on Oct. 27. The U.S. won't be able to get to the bottom of the problem if the government keeps relying on printing money, Xia said. "The financial market in the U.S. is not short of liquidity, and the money can't get into the real economy," he said. Expanding money supply may not be the answer in the U.S. as the high unemployment there is a structural instead of a liquidity issue, Xia said. The Federal Reserve said Nov. 3 it will buy an additional $600 billion of Treasuries through June. Policy makers, setting a pace of about $75 billion of purchases a month, "will adjust the program as needed," the Fed's Open Market Committee said in a statement in Washington. * * * 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

The "Fixes" Posted: 25 Nov 2010 01:32 AM PST It’s not just the Bush tax cuts that expire at the end of the year. The maximum lending limits at Fannie Mae, Freddie Mac and FHA  were set to expire. The Build America Bond (“BAB”) program is another. They both have been “fixed”. We kicked the can down the road (again) while no one was looking. Way back in 2008 when we were really in a financial crisis there was no private mortgage market. The banks were all in the crapper and they were not lending a dime. Without a viable mortgage market there would have been a complete collapse. The maximum lending limits of the D.C. mortgage providers were set at levels designed to support the bottom end of the housing market. In response to the crisis the HERA legislation allowed for a very significant, but temporary, increase in the statutory lending limits. Those temporary increases were supposed to be reversed as of 12/31/2010. They weren’t reversed. They were extended. These critically important extension of federal subsidies to the mortgage market were lumped into a number of other fixes necessary to keep the government moving for another year (Sen. Byrd’s grandchildren get $197k?). The language that “fixed” the problem can be found at this site. The specific wording is at the bottom, in sections 143-146. There was no debate on this. Washington just passed the trash. The Bond Buyer reported on Wednesday that BABs were going to “fixed” as well. The BABs program is another child of 2008 and the HERA stimulus program. The history is not unlike the Agency debt limit issue. In 2008 there was not much of a Muni market left. States were being locked put of the credit markets. Without capital they could not fund projects. The BABs legislation created a new security to allow the states to tap a different capital market. States were permitted to issue taxable bonds. These bonds had higher yields than traditional Muni bonds as they were not tax protected. To offset the cost, the Treasury department is reimbursing the states for 35% of the interest bill. With the federal subsidy the states were again able to issue debt. Two years later the Muni market is in much better shape. But it is still on weak legs and D.C. desperately needs the states to spend money to support the economy. So the BABs legislation will be extended for another year. The municipalities are issuing billions of long-term bonds under the program. The federal subsidy will be doled out for 20 to 30 years as a result. I don’t think there was much choice in the extensions of the emergency steps taken back in 08. If mortgage limits were dropped in the key area on both coasts from the ~$750,000 limit back to the pre-emergency levels of ~$450,000 the real estate market would collapse. Should that have happened we would have been in a deep dark recession in just a few months. Similarly, we would be dead if the Muni market shut down. If state borrowers were forced to pay fair market rates for debt, they would not borrow. As a result they would not spend. Deep cutbacks in key states would have followed. Unemployment would shoot up in that scenario. Absent the BABs program a number of states/cities would have been forced into insolvency. Folks, we are on life support. We have been since 2008. Nothing will change in 2011. QE has been extended, the tax cuts will be extended, BABs and the Agency loan limits are being extended. The IV is full and inserted into the arm. The juice that is keeping us alive is still flowing. But make no mistake about this. Without the IV the lights will go out very quickly. 2011 is the last year for these extensions. When we wake up to the fact that we are alive only as a result of medicine we take on a daily basis there is going to be another “event”. Some say that legislative gridlock is a good thing for the markets. History suggests this is correct. 2011 may prove an exception to the rule. There are too many things on the plate. Speaking of which, enjoy that other plate that is front of you today. bk

Driving the News Agenda: Jones and Keiser Posted: 25 Nov 2010 01:13 AM PST Hat's off to both Alex Jones and Max Keiser. Together, they've drawn attention to the ongoing paper manipulation of the price of silver. Maybe more importantly, they've likely knocked the lid off of Pandora's Box – exposing the enormity of ALL paper frauds being committed by the Federal Reserve and Wall Street's house of horrors.

Nasdaq stocks look a bubble compared with gold producers Posted: 25 Nov 2010 01:10 AM PST Facebook is not yet listed on the Nasdaq and still commands a private company valuation in excess of $40 billion, almost the same as the largest US-listed gold producer Barrick Gold Corporation, while Google at around $200 billion is worth more than all the top 20 US-quoted gold producers together.

Gold Well Below Inflation Adjusted 1980 High in Deutsche Mark Posted: 25 Nov 2010 01:09 AM PST Gold has remained firm despite an increase in risk appetite as seen in the bounce in equity markets in Asia and Europe so far this morning. While Korean concerns have abated for now, eurozone "peripheral" debt is under pressure again pushing spreads with bunds to, or in some cases close to, euro-era highs.

Gold – "Buy on Dips" Advised as Irish Crisis Tips "Ugly Contest" from Dollar to Euro Posted: 25 Nov 2010 01:07 AM PST THE PRICE OF WHOLESALE gold continued to hold steady above $1370 per ounce for US savers on Thursday, trading at two-week highs vs. the Euro as world stock markets gently extended yesterday's sharp rally.

Buy Gold: It’s the Only Way to Combat Government Spending Posted: 25 Nov 2010 01:04 AM PST I tried to tell my boss that my unexplained absence was because I was so Completely Freaked Out (CFO) that I didn't know what to do all weekend except hide like a little crybaby coward in the Big, Beautiful Mogambo Bunker (BBMB) waiting for the inevitable collapse of the entire world order because of the massive over-creation of money by the foul Federal Reserve, where I whimpered and cried in fear because We're Freaking Doomed (WFD) and there is nothing – repeat, nothing! – that can be done.

Is SLV A Tool For Insider Trading Posted: 24 Nov 2010 11:05 PM PST We all know what caused price of silver to go down on Nov 9th 2010 and Nov 16th 2010 – it was increase in margin for silver futures. But what many of traders and investors in silver don’t know, is how price of SLV (biggest silver ETF), behaved around this dates. Changes in SLV volumes [...]

All major bull markets tend to move in three phases Posted: 24 Nov 2010 01:13 PM PST Banks feel threatened by Bullion bulls

The gold records and accounting procedures of the Bank for International Settlements, the central bank of the central banks, are ambiguous and confusing and seem to facilitate the double counting of central bank gold Posted: 24 Nov 2010 12:11 PM PST BIS gold records may facilitate double counting, study concludes

SLV Adds Another 1,661,992 Troy Ounces of Silver Posted: 24 Nov 2010 11:09 AM PST The SLV ETF now sits with 350.2 million ounces of silver.  I just hope it's all there as stated.

Euro collapse winner Germany reports strong data Posted: 24 Nov 2010 11:01 AM PST Europe stocks rise after strong German data

The Day the Dollar Died Posted: 24 Nov 2010 10:40 AM PST

Butler: The silver short position is much bigger than gold in every measurement, especially compared to world inventories. Silver’s relative short position is more than 100 times larger than gold’s Posted: 24 Nov 2010 10:30 AM PST Interview With Ted Butler

You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610