Gold World News Flash |
- Is TV Signaling a Top in Gold?
- GoldSeek.com Radio Gold Nuggets: Harry S. Dent Jr., Monty Guild, & Chris Waltzek
- Gold New Record High at $1,428/oz on Sovereign Debt and Currency Crisis Concerns
- Two Flawed Currencies
- Gold Breakout in Real Terms Means Good Times are Ahead for Gold Bulls
- Gold Seeker Closing Report: Gold and Silver End Slightly Lower After Hitting New Highs
- The Municipal Bond Pitch: “What You’re Giving Me is Pure Bulls**t”
- Life?s Lessons
- Comex Continuous Gold
- Is There a Short Squeeze in the Silver Market?
- Chinese Fakes Grow In Complexity
- How The Securitization Of Mortgages Impacts The Average Citizen
- Debt Bubble Chronicles: Wanna Lose Everything? Follow a 100% “Certain” Forecast From a Guy Who’s Been Wrong 100% of the Time
- Life's Lessons
- Gold & Silver ETF Tax Issues
- Gold Price Needs to Clear $1,430 and Reach at Least $1,458.60, 2% Above The Last High
- Rick Rule: Caution, Extreme Volatility Ahead
- Tax issues in moving or exchanging precious metals
- The Market Is Hurting For A Squirting
- New Rules: You And The IRS This January
- Jim Rogers: Fed understates inflation
- Palladium to the Moon & PAL to the Sun
- [Audio] King World News Interview: Jim Rickards: Part II, Tuesday, December 7, 2010
- Ben Davies: Europe could have another unifying currency
- TUESDAY Market Excerpts
- What Happens When Currencies Go Bust?
- Is this Gold and Silver Breakout The Real Deal?
- Three Things You Need to Know About the Chinese Economy
- Paul Farrell's 10 Reasons Not To Buy Stocks Until After The Next Market Crash
- Guest Post: Sudden Impact
- Gold Daily Chart and Silver Weekly Chart
- Watch Out For A Fake Breakout In Gold And Silver
- China Tells the Truth
- Two steps forward, one back…
- Don’t Bet on New Zealand’s Recovery
- Gold vs. Silver
- Gold Mining Mergers And Acquisitions In 2011
- Ben Davies - Gold, Defaults & A New Brady Bunch
- Gold Registers New High
- Fiscal Discipline and Unintended Consequences
- America’s Next Great Commodity Boom
- These Charts Suggest Gold and Equities Going Higher into 2011
- Rosenberg On Why Fighting The Fed In Real Terms Has Been Very Successful
- Gold And Silver China Panda 2011 Coins Design
- KEYNESIAN ECONOMICS
- The Gross Mismanagement of Mexico’s Oil Industry
- Get Your Gold Out of the Banking System: Jim Rickards
- SIGNS ARE STARTING TO FALL INTO PLACE
- The Futility of Tax Cuts Without Spending Cuts
- Oil Demand’s Triumphant Return
| Is TV Signaling a Top in Gold? Posted: 07 Dec 2010 07:35 PM PST ChartProphet submit: Television may be signaling a top in gold in a similar way it signaled a top in housing. At the height of the housing craze, with the “unlimited potential” involved in rising real estate prices, some investors pocketed huge gains by “flipping” houses. By purchasing houses that either needed repair or were simply selling at a discount to market valuations, investors were able to renovate the houses or quickly resell them for considerable gains. This method, or strategy, became so lucrative for some investors, that buying houses to actually live in or sell years down the road no longer proved necessary; “flipping” was the new fad. Complete Story »
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| GoldSeek.com Radio Gold Nuggets: Harry S. Dent Jr., Monty Guild, & Chris Waltzek Posted: 07 Dec 2010 07:00 PM PST GoldSeek.com Radio Gold Nuggets: Harry S. Dent Jr., Monty Guild, & Chris Waltzek
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| Gold New Record High at $1,428/oz on Sovereign Debt and Currency Crisis Concerns Posted: 07 Dec 2010 06:43 PM PST Gold has reached new record nominal highs (in most major currencies) and silver a new 30 year nominal high due to a variety of macroeconomic and geopolitical factors. Market focus remains on the Eurozone debt crisis but has shifted somewhat to concerns about ultra loose US monetary policy and the likelihood that this will lead to a devaluation of the dollar, inflation and currency debasement.
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| Posted: 07 Dec 2010 06:11 PM PST Despite America's economic problems, the US dollar has maintained its respected status the world over - and has even managed to maintain value in comparison to other currencies. It appears that the dollar will likely finish 2010 at the same levels that it started. Even today's announcement of more tax cuts and stimulus, which will guarantee widening federal deficits for years to come, could not put a dent in the dollar. The dollar's charmed life stands in strong contrast to the euro, which is currently suffering from its internal flaws and the Europeans' unfortunate recognition of reality.
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| Gold Breakout in Real Terms Means Good Times are Ahead for Gold Bulls Posted: 07 Dec 2010 06:05 PM PST In past commentaries, I've written about my favorite form of technical analysis. That is intermarket analysis. Intermarket analysis takes traditional technical analysis much further. Normally, we'd look at a market by itself. We'd look at its price action, potential patterns and its momentum. Intermarket analysis takes this a step further by comparing the market at hand to various other markets. It gives us an idea of what is really going on and where market leadership is.
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| Gold Seeker Closing Report: Gold and Silver End Slightly Lower After Hitting New Highs Posted: 07 Dec 2010 04:00 PM PST Gold climbed throughout most of trade in Asia and London and rose to a new record intraday high of $1430.90 by a little before 9AM EST, but it then fell back off for most of trade in New York and ended near its noontime low of $1402.44 with a loss of 0.49%. Silver climbed to a new 30-year high of $30.688 before it fell to as low as $29.55 in early afternoon trade, but it ended with a loss of just 0.2%.
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| The Municipal Bond Pitch: “What You’re Giving Me is Pure Bulls**t” Posted: 07 Dec 2010 03:30 PM PST Undaunted by falling municipal bond prices, rising yields, and withdrawal of funds, research reports by large brokerage firms still mollify the majority of clients and fund managers with numbers and assertions: "General obligation bonds do not default." "The general obligation default rate is 0.01%." "Most states are required by law to balance their budgets." To these and other airtight arguments in the muni marketing kit, the proper articulation of doubt may be expressed as: "Yeah, Yeah, Yeah." Or, one might read "Possible Misunderstandings by Municipalities and Their Bonds." This précis was written in April 2010. It is a sign of the times that market-making brokerage houses and fund companies still roll out the same phrases and avuncular charm, dismissing critics, but with nothing new to add. Meredith Whitney, an Oppenheimer bank analyst (at the time), told an uncomprehending world in 2007 that banks were going bust. In September 2010, she issued a 600-page report that projected the same for mendicant states and municipalities. One expert replied that he was "somewhat skeptical about Ms. Whitney's sensational hypothesis and [felt] that she might be trying to hit a 'home run' like she did with the banking crisis." Of course she was trying to hit a homerun! Why else would she write a 600-page report on municipal finance? That has nothing to do with her argument that California, New Jersey, Illinois and Ohio may either default or need a federal bailout in the next twelve months. (Ten months from now, since she stated the warning on September 30, 2010, via Bloomberg TV.) It has become clear that the states and municipalities facing the greatest financial difficulties will default. This applies to their general obligations and probably many revenue projects, too. This forecast is a synthesis of observation. Those in hock cannot tie their own shoelaces. For investors who hold the municipal bonds of localities where evening news coverage from state houses and town halls could be mistaken for an episode of the Bowery Boys, there is no reason to expose your net worth as an air-raid shelter over the pathologies of American excess. During the course of nearly two decades setting investment policy and asset allocation with companies, municipalities, and unions, it became clear to me there were organizations (companies, municipalities, and unions) that understood what needed to be done and did it. There were also those that avoided any sort of unpleasantness by delaying, forgetting, or concentrating on minutiae. It was rare for a pension plan's committee to hop from one of these categories to the other. Those that delayed turned manageable situations into quagmires. (A comparison to Washington is apt.) And so we see, despite the extended period during which municipalities were granted to right their wrongs (the Federal government filled financial gaps), the general tendency among the damned and the dead is, still, to borrow more money. Nearly $42 billion of municipal bonds were issued in November 2010, according to the December 1, 2010; issue of the Bond Buyer. That is nearly one-quarter of the $177 billion municipal volume for all of 2006, a year when property taxes were rising faster than money could be spent, at least among the more sober-minded. The dysfunctional cities and towns managed to build high school gymnasiums that could house the Baths of Caracalla while others started – but never completed – baseball stadiums, renewable energy incinerators, and "tunnels to nowhere." The last is in Pittsburgh, a city apparently yearning for a Municipal Darwin Award. The city counsel is incapable of selling its parking garages for a bid of $423 million, money that is badly needed. The "tunnel to nowhere" is a $500 million public transit project, already $125 million over budget, a clogged artery symbolic of the minds that rule Pittsburgh and those in dozens of cities and states across the United States. The commonly cited 0.01% default rate applies to general obligation bonds issued since 1970 that were rated by one of the agencies. The 1970s was a decade of great trouble for some municipalities, most of which maneuvered out of harm's way. That was a different time. The level of debt, fixed costs, and corruption; the incapacity to manage, to act, to think logically has blossomed into a New Era. This New Era of concentrated madness, run amok among certain Nasdaq stocks in the late 1990s, was captured by James Burke, a science historian whose study for the Royal Society for the Arts, Opening Minds, was publicized in May of 1999: "Instead of judging people by their ability to memorize, to think sequentially and to write good prose, we might measure intelligence by the ability to pinball around through [sic] knowledge and make imaginative patterns on the web." The weird mutterings of the current Federal Reserve chairman is an example that barely needs mentioning. Felix Rohatyn, who played the lead role in saving New York City from bankruptcy in the 1970s, spoke recently at a Grant's Interest Rate Observer conference at the Plaza Hotel in New York. His talk was distilled in a subsequent edition of Grant's: "Asked if his experience with New York in the 1970s provided a template for solving the public-debt problems of today, Rohatyn could only lift his palms and shake his head. The numbers are staggering, the constitutional barriers formidable and the political will absent." The man who accomplished the impossible, the bailout of New York City in the 1970s, is at a loss: "I just don't see where you go to restructure this." Rohatyn continued: "'I think that if you have to go into some kind of dramatic, last-minute restructuring with these kinds of amounts that we're dealing with, I would just shudder at that.' That the city muddled through in the 1970s Rohatyn attributed to the good-faith efforts of radically different (and usually antagonistic) interests to effect a compromise. In recalling what worked then, Rohatyn found his gravest cause for concern today. Said the long-serving Lazard partner: 'I don't see this anywhere on the horizons today, whether it's at the state or at the level of the city, where I could put together six people, eight people, or 10 people, that you could close the door with and say 'how do we do this?'" Rohatyn's macro view complements the micro perspective of a veteran who has served on municipal committees and boards for the past forty years. As People magazine might say, what follows is from an exclusive, story-behind-the-story discussion with a man who knows where all the bodies are buried: No one in the Town is worried about their rating or what others think of the balance sheet. [And, that the municipal bond market might shut down for rollover and new debt- FJS.] There is still a sense that they can pay to have their debt guaranteed and upgraded to save on interest. And rates are so low, what the hell. All the Towns are in the process of rolling their debt while rates are attractive….The towns are not just rolling debt to lengthen maturities; they are in a sense taking equity out of the house. They are putting a bit of free cash (as it is called on budget) away for future needs, meaning that they are borrowing for next year's budgets. I think we can conclude that there are some new sub prime munis being issued this year. [These are still rated as high-grade bonds by the agencies - FJS] A town treasurer helped the veteran, who was already well acquainted with municipal finance accounting (and mis-accounting): [He] made sure that I did not stop with the Town's latest "official Statement" dated Sep 1, 2010. "There are certain liabilities which are not on the balance sheet that you should know about. It says our total debt is $98 million, but that does not include our cost of closing the dump ($19 million), our interest due ($9mm), our health insurance liability ($35mm), and the cost of closing the Town's Street and Bridge Lots ($5mm for hazardous waste)." When I asked about the unfunded pension liability, which I know to be in excess of $72mm, he nodded and said something like: "No one is quite sure how to calculate the pension liability, and it is above my pay grade, but it is at least as much as the total Town Debt outstanding; I would use that number." Felix Rohatyn just published his autobiography, Dealings: A Political and Financial Life. He remembers a meeting in 1975 with the then deputy mayor of New York, James Cavanaugh. The city's finances had so deteriorated that it was not able to issue long-term bonds. (This is a timely reminder of what to expect in 2011: There will be states and cities unable to issue bonds or rollover debt. If the federal government, including the ever-expanding Federal Reserve, does not or cannot fill the gap, scrip will be issued to pay municipal bills and salaries.) Cavanaugh claimed that New York City was running a balanced budget. Rohatyn disagreed. Cavanaugh "breezily" patronized Rohatyn: "I see you don't know much about municipal finance." The investment banker who had negotiated the largest merger in American corporate history (ITT and Hartford Insurance Company) shot back: "Mr. Cavanaugh, I may not know much about municipal finance. But I know about bulls**t. And what you're giving me is pure bulls**t." Back to the 40-year veteran. He found the most illuminating document in Massachusetts is the Official Statement (OS). The municipalities are required to publish the OS whenever a new bond is sold to the highest bidder: The OS is similar to a prospectus, but is far more interesting to read. You need all the schedules so that you can adjust the Town's net worth, so to speak. None of this material is ever put on the web sites of the Town and though there is a law (I am told this) that the Commonwealth [of Massachusetts] should now be posting this information, it was decided by the State House that the cost of this action is not worth the result. They sited [Governor] Deval Patrick's goal of grouping towns as a reason not to put this information on the state's site. Grouping the financial statements of towns in a consolidated statement, municipalities that already leave over half their liabilities off balance sheet, sounds like a combination of Enron's dirty dealing tucked inside an impenetrable Collateralized Debt Obligation. I may not know much about Massachusetts state house budgeting. But I know about bulls**t. And what the 40-year veteran was told is "pure bulls**t." Regards, Frederick Sheehan, [For more of Frederick Sheehan's perspective you can visit his blogs here and at www.AuContrarian.com. You can also purchase his book, Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009), here.] The Municipal Bond Pitch: "What You're Giving Me is Pure Bulls**t" originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Posted: 07 Dec 2010 03:00 PM PST View the original post at jsmineset.com... December 07, 2010 06:08 PM Dear Jim, We are taught very earily in life that there are two sides of everything. The battle between good and evil, cartels versus free markets, bulls and bears etc. *Unfortuantely, embracing this life lesson will pick the pockets of many men and women in the markets. *There is only one side to the markets, that is, the right side. *No amount of chart painting will reverse the right side. *The chart painters use their operations to reposition to the right side under the cover of public panic because they know this lesson well. As*you have*said, three taps and out represents a reasonable supply and demand cycle for many markets. *Three taps and out of the upper trading channel, and the gloves come off in gold. Regards, CIGA Eric...
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| Posted: 07 Dec 2010 03:00 PM PST View the original post at jsmineset.com... December 07, 2010 03:30 PM * ...
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| Is There a Short Squeeze in the Silver Market? Posted: 07 Dec 2010 03:00 PM PST View the original post at jsmineset.com... December 07, 2010 03:09 PM Dear friends, As mentioned in my post yesterday, I have been monitoring the silver market for any signs of a short squeeze in relation to the ongoing campaign to push out Morgan. I was curious whether or not we would see any signs of distress among some of the shorts yesterday as silver first pushed past the $30 mark. The open interest numbers that were released earlier this AM show that if Morgan was indeed being squeezed, some fresh shorts were there to take their place. As a matter of fact, the last previous three sessions prior to today's, have seen fresh shorts coming into the market rather than shorts as a whole being squeezed out. We are not privy as to who the actual market participants are in any day-to-day price action but one thing is certain based on the RISING open interest – fresh shorts are coming in. A short squeeze of the nature that many are hoping to see in silver in regards to Morgan would be a...
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| Chinese Fakes Grow In Complexity Posted: 07 Dec 2010 01:58 PM PST Gone are the days of gold coated tungsten bars, shaved or skimped ounce rounds, or completely faked gold painted coins sold as replicas. Today's gold fakers are using alloys – not coatings – to produce some of the best fakes the physical gold market has ever seen.
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| How The Securitization Of Mortgages Impacts The Average Citizen Posted: 07 Dec 2010 01:56 PM PST Tweet
Reading time: 12 – 20 minutes Trace: Welcome back to the Runtogold.com Podcast. I have with us Aaron Krowne, who operates ML-implode.com, the Mortgage-Lender-Implode-o' Meter. Welcome, Aaron! Aaron: Hey Trace, good to talk to you again. Trace: Live from DC, it sounds like. So, we were talking about a little bit before the show about this foreclosure gig and robo-signing, about how it erodes the foundation for the entire securitisation market. I have actually got a friend who's a commercial appraiser and he says that that market is pretty much completely frozen; securitising these large mortgage-backed securities, things of that nature. Can you talk a little about this foreclosure gig and about this robo-signing has affected the securitisation of mortgages, and how that is going to impact the average citizen. Aaron: Well, there's two parts. There's the on-going part, and then there's what has already been securitised. I'll mostly talk about what has already been securitised. It can be compared to when the sub-prime crisis was blowing up big. Six months or so after I started ML-impolde.com and the media started catching on, and the basic theme was that you had these bad loans, and these pools of loans, that were packaged and re-packaged sometimes and sliced and diced and distributed around the world. In many cases, these banks buying from the pool of other banks. So they were all over the place, and it was discovered that some of the loans were originally with such low standards that they started going bad in huge numbers, rapidly and they were popping up all over the place. It was like whack-a-mole, or an Easter egg hunt with rotten Easter eggs. And they were popping up later –especially the ones that hadn't been found originally.
This is more than just whether the T's have been crossed and the I's are dotted in doing the paper work. This is actually whether the loans were transferred properly into trusts, because when you securitize loans they are put into a trust entity, which is a semi-separate entity and if that's not done right, then you lose the authority to foreclose, you lose tax privilege status, potential investors lose recourse, and by some accounts by some very intelligent people, you have this as the rule, not the exception. Trace: Yeah and when we're talking about this, due process, one of the fundamental tenants in real estate property law is you have to have stuff properly recorded. You have the properly record the deeds, you have to properly record the mortgages, and the way the real estate law has evolved, because it's tied to the land, it's very much a county by county…it falls under the umbrella of state law, property contract court law, those are state functions. So, the judge in the county where I grew up in Florida, he's the Duvall County judge who said they'd committed fraud on the court with this robo-signing in the foreclosure that you're talking about. Now, what exactly did they do with MERS Aaron: Right. That's maybe the core reason or the genesis of this, is they wanted a more efficient system so that they could securitize the loans and move them around and resell them and things like that. I think it might go a little deeper, that it actually become easier to sell the loans multiple times in what they call hypothecate and re-hypothecate them, which is basically another form of money-printing. But even if you accept that it was just for the efficiency reasons, basically they didn't do their legal homework on how they would need to set this up, to make it legally viable, and they just went ahead with it anyways. Even Fanny and Freddy endorsed it and bought into the system and are a core part of this and as we are finding out, judges in courts around the country are waking up. Trace: And this might have been that they made a calculated choice based on the moral hazard that, well we can just override the state law, or we can jus not pay attention to it, and privatise the gains so that people who securitised all these things are getting paid to create them, they are getting paid their bonuses for selling them, and then when the proverbial crap hits the fan, because of the moral hazard they say, "oh, well we'll just retroactively go back with federal pre-emption and federal law and try to fix this". And that was the bill they tried to pass retroactively deal with all these fake notarised documents, but then that got struck down because of popular outcry. Aaron: Well, that's part of it. I don't think that that bill would have done much because it wasn't just the notarisation; it was also the nature of the assignments and transfers. So, that would have been step 1 for retroactively legitimising this. But even if they got a slew of the retroactive fixes passed, those would still be ex post facto laws which would still be subject to widespread court challenge. Trace: And it would still be unconstitutional. Aaron: It would still be unconstitutional. So it wouldn't make this huge legal firestorm go away, and even though they have halted foreclosures and they have fired certain law firms and they have stopped using MERS, and are going back and trying to do the recording locally like they are supposed to. That's doesn't retroactively fix the problem. All these loan pools are now tainted. Just like with sub prime, you don't know really what the value is in them because you can't recover value on a loan like you used to be able to when you were able to foreclose. And in addition to the lack of ability to be able to sell that property and pocket what you can, you have the legal fees for fighting battles on these. Anybody can challenge their foreclosure, and if they find that there's not an authority to foreclose, if the assignments weren't done correctly, then you are stuck, as an investor note holder. So we really don't know the scope of that at this point. Trace: And it can be huge. Aaron: And I think it is. We're talking trillions of dollars of essentially new bad loans that we thought were ok, or that were popularly thought to be ok. So, in absence of a massive rescue program, where say they get Fanny and Freddy to buy up massive amounts of troubled loans, essentially printing the money to do it, I don't see how they are going to fix this. Trace: But even if they do print that money up… you're familiar with the liquidity pyramid, what's happening is that people are selling their mortgage backed securities or whatever and buying something further down on the pyramid. So all that that's going to do is print more of the fiat currency illusions that go up the pyramid and evaporate in their purchasing power anyway, so it's not like that's going to be able to fix the problem and restore the illusory wealth that had existed because of this fiction that the banks have perpetrated, probably to get their short term bonuses and things of that nature. Right? Aaron: Well, yeah, there's many trillions of dollars of what we call value of what was assumed to be in the housing stock when they ran up the bubble, and the banks ran up the bubble and they are really at the core of this; the feds and the banks. And they are never going to get that back. Trace: Because it never existed. Aaron: Exactly. They never existed. People are never going to get that back, but that doesn't stop politicians from printing money… Trace: …from trying. Aaron: Yeah. And making promises, and basically shifting the damage off of themselves and shifting the blame off of themselves and that's exactly what these bank bailouts mean, they mean executives, and to some extent share holders of these companies, get bailed out while the public more directly takes the brunt. Trace: So, privatising the gain, socialising the losses. Which is the same thing that has eroded the solidarity of European banks also, isn't it? Aaron: Right. Exactly. It's going on everywhere and it's a global phenomena, absolutely. I think that were going to see more waves of this where there's just massive problems with the loans, how they were done, or the valuation or they will find that massive fraud was embedded and it happened during the bubble and it happened, like you said, it's going to cause this irreversible trend of people over time, not necessarily month by month but year by year moving out of paper assets that are very hypothetical in value and moving into more concrete assets because those are the only places where they can be sure to preserve what's left of their wealth. Trace: Right. You know, you want to saw you're a saver, you consume less than you make or produce, and so you have this excess capital, what do you do? We used to loan it to people, so they could build suburbia. But now, we aren't necessarily… Aaron: Yeah I mean, what do you do with it? People ask me, "what should I invest in? Where should I put my money to be safe?". And usually they don't want to hear "put it in gold, or put it in silver", because that's what loony people do, right? But I don't have much else to tell them. Trace: You don't want a mortgage where you don't have the right to necessarily foreclose? Aaron: I mean, unless you are really going to do a lot of work, I wouldn't even buy real estate. You really need to do your homework to know where it's actually likely to go up on its merits, as opposed to just getting into a huge Ponzi scheme, so there's no easy answer and I don't see many refuges for wealth in the land of paper. Trace: About 5 years ago I had a friend who I had lunch with, and he said "hey, I'm thinking of buying a condo" and I said "no, don't buy a condo right now! They're expensive." And he said "well, what should I do?" and I said "Well, buy silver or gold." Well, he did not buy the condo. He's one of the people who actually took my advice – who would have thought?- and we had lunch about a year ago and we were talking about these things and he said "Yeah, I am still buying my gold and silver, so when should I buy my condo?" and I was like "well, probably not yet. But where exactly are you, because you didn't buy the condo." Based on the market that he was going to buy the condo, we will assume it was a $420,000 condo, and we'll assume that we would have put 10% down, and then we'll assume the difference that he would have paid between the mortgage and rent he just would have bought silver every month. Well, in those 3 years and a half, between when we had the conversations, if he had bought the condo, he would have had a mortgage of about $360 000 and the condo would have been worth conservatively about $350,000, probably less. If he had bought the silver, he would have had enough silver to buy about a third of the condo at its current price. Just in three years, by being on the right side of the trend. Aaron: There are even more extreme examples out there in a number of episodes with my family where I gave similar advice and some people took it, and some people –usually most people- didn't , and there are many cases 4 times worse off, or more. Trace: Yeah, so I think that I can agree with you that I don't necessarily like the metals, particularly at these all time highs, where they are getting quasi-expensive. But the other side of the coin is i don't want little fiat illusions that are just figments of people's imaginations that are just represented by some digit on a webpage, I don't want that. Aaron: Well, my point is that we are really not even at the half way point is in discovering where all the rot is in the paper investments, which is the majority of the financial world. I see that process is really getting into its high-momentum phase of breakdown and turning a point in sediment where it actually becomes popular knowledge that you want to have a lot of precious metals and not just be in paper, and not just be trusting the government and their bonds. Trace: And of course you have got the other component, you know there's a reason why tax codes encourage people to go into debt and get real estate as opposed to buying the metals and that's because when people "own" their houses, they have a lot more at stake in social peace and tranquility. I mean obviously you don't want to riot and burn down your own house. But now we are seeing that being completely eroded and I mean look at what's happening over there in Europe; you had Paris, and you had Ireland and you got Greece and so these things could also be coming here and that's another reason not to own real estate, it's because of that potential risk. Aaron: Right, you really see this sediment turning, where I can see that some places prices are fair, especially if you are buying distressed real estate, the sediment is the beginning point where people are just beginning to rule out real estate completely, it's almost like a generational thing but it's in response to just how far the other direction went as a society and there's always an over correction in the other direction with any bubble. Trace: And we're just getting started, huh? Aaron: I think we are. I know you say that the metals are expensive, but you know I think the increase has been modest especially compared to making up lost ground for the many years that were likely manipulated to the downside, so you know I think there is quite a ways to go. Trace: I agree, this is going to be a long generational bull market. It might take another 25-30 years before we see the turn happen and a lot of it depends on how quickly we do it politically. Anyways, I think we are out of time so thank you very much for coming on the podcast today! Copyright © 2008. This article was published on http://www.RunToGold.com by Aaron Krowne on December 7, 2010. This feed is for personal and non-commercial use only. Applicable legal information and disclosures are available. The use of this feed on other websites may breach copyright. If this content is not in your news reader then it may make the page you are viewing an infringement of the copyright. Please inform us at legal@runtogold.com so we can determine what action, if any, to take. If you are interested in how to buy gold or silver then you may consider GoldMoney.(Digital Fingerprint: 1122aabbLittleBrotherIsWatching3344ccdd) Copyright © 2010 RunToGold.com. This Feed is for personal non-commercial use only. If you are not reading this material in your news aggregator then the site you are looking at may be guilty of copyright infringement. 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| Posted: 07 Dec 2010 01:30 PM PST Debt Bubble Chronicles: Wanna Lose Everything? Follow a 100% "Certain" Forecast From a Guy Who's Been Wrong 100% of the Time
Anyone doubting that the powers that be are getting desperate to maintain stock prices should consider that announcements of Bailout Ben Bernkanke's appearance on 60 Minutes and his proposed claim that he may increase QE 2 was enough to kick off a 3+% ramp job in stocks last week. Regardless of this mindlessness, Bernanke's appearance did offer us a glimpse into his thinking or lack thereof. Many commentators have been stunned by his assertion that he is "100% certain" he can control inflation. I wasn't. After all, Bernanke's been nothing if not 100% certain of himself while being 100% wrong for the last five years. Why break the streak? For anyone who still takes this man seriously, I strongly suggest watching the below video chronicling his forecasts from 2005 onward. If it weren't for the fact that his predecessor at the Fed, Alan Greenspan, was also wrong about everything, the following would make you want to run face first into a wall.
The most important item I want to focus on is the fact that Bernanke didn't see the 2008 Crisis coming, because it gives us an excellent understanding of how out of touch Bernanke is (or pretends to be) when it comes to systemic risk in the markets. In this context, his assertion that he is "100% certain" he can control inflation should be a clear warning to investors that inflation is coming in a BIG way in the future. Bernanke has been flat out 100% WRONG on everything, particularly his own abilities, over the last five years. So be prepared to see inflation explode soon. In fact it already has. Both Oil and Gold have roughly doubled in price per Dollars since Fed first started buying Treasuries in March 2009:
Similarly, agricultural commodities are up some 53% since the Fed announced QE 1.
Forget Bernanke's claim he can control inflation, the inflationary genie is already out of the bottle. Seriously, the charts don't like: guy's talking about his ability to control inflation and it's already here. So let's add an "inflationary storm" to the list of things Ben Bernanke has been 100% wrong about over the last five years. This makes the official list: 1) A housing bubble in the US 2) A recession happening in the US 3) The subprime crisis being contained 4) The 2008 Crisis happening 5) US housing bottoming 6) A recovery occurring in the US economy 7) Inflation hitting the US Seriously, HOW does this guy still have a job let alone any credibility? On that note, if you've not yet taken steps to prepare for the upcoming inflationary storm, NOW is the time to do so. We've already seen the warning signs, what follows will lay waste to portfolios and profit margins alike. And Bernanke will be absolutely powerless to stop it. Heck, the guy can't even see a 1 in 100 year housing bubble! I'd like to show you how to profit from this debacle in a BIG way. I'm currently in the process of preparing a Special Report entirely devoted to maximizing investors' portfolio returns during the coming inflationary disaster. Subscribers of my Private Wealth Advisory newsletter are already up 27% and 71% on my two inflation plays, respectively... and I'm about to unveil three more positions in my Inflationary Storm Report later this week. If you'd like to get a copy of this report and find out what my next three Inflation Investments are (all of which have triple digit gain potential, I might add)... you can take out a "trial" subscription to Private Wealth Advisory today and I'll send this report to you the moment it's complete via email. To reserve your copy today... With Private Wealth Advisory, I make it a point to prepare my subscribers for every major market development. To find out what my next three Inflation Trades will be... Good Investing! Graham Summers PS. An annual subscription to Private Wealth Advisory costs just $180. However, I realize my analysis and investment style are not for everyone.
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| Posted: 07 Dec 2010 01:08 PM PST Dear Jim, We are taught very earily in life that there are two sides of everything. The battle between good and evil, cartels versus free markets, bulls and bears etc. Unfortuantely, embracing this life lesson will pick the pockets of many men and women in the markets. There is only one side to the markets, that is, the right side. No amount of chart painting will reverse the right side. The chart painters use their operations to reposition to the right side under the cover of public panic because they know this lesson well. As you have said, three taps and out represents a reasonable supply and demand cycle for many markets. Three taps and out of the upper trading channel, and the gloves come off in gold. Regards, CIGA Eric
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| Gold & Silver ETF Tax Issues Posted: 07 Dec 2010 12:17 PM PST A SOLARI REPORT — SELECTED TAX ISSUES TO CONSIDER WHEN INVESTORS MOVE OR EXCHANGE PRECIOUS METALS HOLDING By Carolyn A. Betts and Catherine Austin Fitts Solari | Tax Issues to Consider When Moving or Exchanging Precious Metals Holdings Download a PDF version of this article I. INTRODUCTION In our May 2010, Solari Special Report "GLD & SLV: Disclosure in the Precious Metals Puzzle Palace: An Analysis of the Precious Metals ETFs" we raised questions about the safety of investments in precious metals in the form of shares of exchange-traded funds, which represent undivided interests in pools of precious metals held by custodians with direct accountability for holdings only to the fund sponsors. In our August 2010 Solari Special Report, "Options for Storing Precious Metals" we explored some of the different forms of more direct precious metals holdings and third-party storage facilities that facilitate such holdings. These included: bank and nonblank safe depo...
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| Gold Price Needs to Clear $1,430 and Reach at Least $1,458.60, 2% Above The Last High Posted: 07 Dec 2010 11:50 AM PST Gold Price Close Today : 1403.10 Change : (7.00) or -0.5% Silver Price Close Today : 29.748 Change : 0.043 cents or 0.1% Gold Silver Ratio Today : 47.17 Change : -0.304 or -0.6% Silver Gold Ratio Today : 0.02120 Change : 0.000136 or 0.6% Platinum Price Close Today : 1703.70 Change : -18.50 or -1.1% Palladium Price Close Today : 742.25 Change : -13.00 or -1.7% S&P 500 : 1,223.75 Change : 0.63 or 0.1% Dow In GOLD$ : $166.74 Change : $ 0.80 or 0.5% Dow in GOLD oz : 8.066 Change : 0.039 or 0.5% Dow in SILVER oz : 381.85 Change : -0.11 or 0.0% Dow Industrial : 11,359.16 Change : -3.03 or 0.0% US Dollar Index : 79.57 Change : 0.242 or 0.3% Until about 9:00 the GOLD PRICE continued its rise from last Thursday, but at $1,430.50 the short-sellers overwhelmed the longs. They pushed gold off the cliff and it left a gap from 1421 - 1423, then continued falling. Around Comex closing time it lifted to $1,408.30 (above my second resistance level at $1,405) but then plunged again for a low at $1,397.35. Gold has since recovered to $1,403.80. Now, don't count gold out yet. Yes, it was ambushed at $1,430, but that's about where the last intraday high was, so it was logical that gold would bounce off that spot. Yes, today's fall looks like a break and peak, but I remains enshrouded in a huge "Maybe." Today gold closed at $1,408.30, down $7.00 How can we tell if it didn't peak today? It will clear $1,430 and reach at least $1,458.60, 2% above the last high. Should gold close below $1,350, then you can go ahead and catalogue today as The Peak. The SILVER PRICE situation didn't improve today. Yes, it made a new high at 3072c early in the day, but then fought its way down a mountainside to a 2845c low, right back where it started last Thursday. As with gold, silver's break here may or may not mark the peak. Can't tell until we watch the follow-through. A close below the 20 DMA (2744c), which since last August has served as silver's safety net, would reveal silver's intention to drop. A close below 2645c signals a large, painful drop. I reiterate: don't count the metals out yet. Peaks have to be confirmed by markets crashing through support levels. We haven't seen that yet. We were able to enter a few more trades today at a 47.5:1 or better GOLD/SILVER RATIO, but not nearly as many as we would have liked. If we see 47.5:1 or better, we will swap more, but the market tells us, we don't tell the market. US 90% is still trading at a large discount. That also points to a peak. Let me clean up a mess: 1. Yesterday I meant to write "swap GoldMoney silver for GoldMoney gold", not vice versa as I did. Most of the day today I felt like I was surrounded by anxious buzzards. It was as tough a day as I've seen in 30 years' trading. Silver's wild ride ran from 3007c to 2845c, 162c. Gold ranged from $1,430.50 to $1,397.35. Should you count them out yet -- or? The scrofulous US dollar, warts and all, rose 38.3 basis points (0.49%) to 79.954. I seldom say, 'I told y'all so' but I told y'all so. Now the dollar has double-bottomed Friday and today at 79.10 and 79.20. It needs to clamber through 80 to prove that it is not beaten yet, but I expect that tomorrow. Euro today fell 0.52% while the yen rose 1.28%. None of that makes any sense, nor should you expect it to, since none of these fiat currencies have any objective value. Thus they sway like wispy palms with every breeze of public emotion, first this way, then that, then clean on the ground. Anyway, dollar is leading the pack now and if it clears 80 will keep on leading for a time. STOCKS today were mixed, some indices up, some down, signalling confusion and bewilderment. Dow lost 3.03 to 11,359.16 while the S&P500 picked up a gigantical 0.63 to close 1,223.75. Leave stocks alone: they are the Black Mamba of investments. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2010, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. 
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| Rick Rule: Caution, Extreme Volatility Ahead Posted: 07 Dec 2010 11:29 AM PST Source: The Energy Report 12/07/2010 Always well ahead of the pack, legendary investor Rick Rule presages major volatility in the energy markets. "I can guarantee this," he says, "over the next two years, we're going to experience unbelievable volatility." In this Energy Report transcript from his Dec. 3 webcast, Rick dissects the gamut of energies—from fossil to alternative—revealing an interesting paradox that is a "game-changer" for uranium, why he calls alternative energy "the alter ego of rare earths" and an international wild card in oil. Christmas comes early for knowledge-hungry investors, as Rick's altruistic counsel presents nothing short of a gift. To find out how to profit from the coming turbulence, read on. (This article covers the energy-sector portion of Rick's interview. Read Rick's thoughts on precious metals on The Gold Report.) Jeff Howard (CEO, Global Resource Investments): Ok ladies and gentlemen, I'd like to welcome you to today's b...
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| Tax issues in moving or exchanging precious metals Posted: 07 Dec 2010 11:12 AM PST 7:12p ET Tuesday, December 7, 2010 Dear Friend of GATA and Gold (and Silver): Solari Inc. President Catherine Austin Fitts and her lawyer, Carolyn Betts, whose study published in May, ""GLD and SLV: Disclosure in the Precious Metals Puzzle Palace," exposed conflict of interest and crucial omission in those exchange-traded funds (http://www.gata.org/node/8600), have just published another important study, this one about the tax issues likely to face precious metals investors. It's titled "Tax Issues to Consider When Moving or Exchanging Precious Metals" and you can find it at the Solari Internet site here: http://solari.com/articles/Tax_Issues_re_Precious_Metals_Holdings CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Opportunity in the gold coin market Swiss America Trading Corp. alerts GATA supporters to an opportunistic area of the gold coin market. While the gold bullion market has been quite volatile lately and as of November 29 gold has risen only $7 per ounce over the last month, the MS64 $20 gold St. Gaudens coin has risen about 10 percent in the same time. The ratio between the price of these coins and the price of gold is rising. If you'd like to learn more about the ratio and $20 gold coins, Swiss America can e-mail you a three-year study of it as well as other information. Swiss America also can provide a limited number of free copies of "Crashing the Dollar," a book written by Swiss America's president, Craig Smith. For information about the ratio between the $20 gold pieces and the gold price and for a free copy of "Crashing The Dollar," please call Swiss America's Tim Murphy at 1-800-289-2646 X1041 or Fred Goldstein at X1033. Or e-mail them at trmurphy@swissamerica.com and figoldstein@swissamerica.com. Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52 percent NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| The Market Is Hurting For A Squirting Posted: 07 Dec 2010 11:09 AM PST
From Nic Lenoir of ICAP The Market Is Hurting For A Squirting Was this the latest case of buy the rumor and sell the news after QE 2.0 proved to be pretty much the lows in yields (for now at least)? The market started the day bright eyed and bushy tailed after last night's announcement by Washington that a tax deal is close: Republicans win, Democrats win, America loses! The conversation probably went something like this: Republicans: "If you don't extend the tax breaks we will roll back your health-care plan"; Obama: "But this is my place in history at stake here! Ok you get the tax breaks, but I am going to add my own twist with social security tax cut (it's so far under water it doesn't matter anymore) and extension of unemployment insurance, this way the folks hurting out there know I am looking out for them and I don't look like I just got owned"; Vigilante: "That's 900Bn over 2 years, who's going to pay for this?"; Republicans and Democrats: "Ha ha ha."
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| New Rules: You And The IRS This January Posted: 07 Dec 2010 10:44 AM PST The new ObamaCare1099 rule for reporting of all cash, credit and check business transactions of $600 or more is scheduled to begin January of 2012. This is really an extension of the 2008 Housing and Recovery Act IRS rules that start this January when merchant banks and PayPal will report business sales directly to the IRS (the reporting threshold is $20,000 and 200 transactions a year). These new IRS rules will affect every American: • Income tax collection could rise as much as $345 billion a year • Small businesses will be crushed and unemployment will rise • A cashless economy is further set in motion • IRS snooping and audits will increase • Gold can be tracked • Identity theft is a risk • Government surveillance will increase THE TAX GAP ObamaCare requires that businesses and self-employed individuals submit 1099 forms to the IRS for all business purchases of $600 or more. The stated purpose for this is to close the 'tax gap' which is the difference between the amount of what is "owed" and what is paid, due to lack of reporting and under-reporting, and is estimated at $300 billion dollars a year. Last week, the Senate failed to repeal the ObamaCare 1099 rule because they could not agree on how to make up the "lost" revenue that would be generated from strict reporting, which they estimated to be $19 billion over 10 years, which is a GROSS underestimate. More Here.
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| Jim Rogers: Fed understates inflation Posted: 07 Dec 2010 10:32 AM PST By Steven C. Johnson and Frank Tang The U.S. central bank uses inflation data that relies too heavily on housing prices, Rogers told the Reuters 2011 Investment Outlook Summit, and he criticized the Fed's $600 billion bond-buying program. Rogers, who rose to prominence after co-founding the now defunct Quantum Fund with billionaire investor George Soros some four decades ago, said he was betting against U.S. Treasuries. … "Everybody in this room knows prices are going up for everything," Rogers told the Reuters Summit. … "If the world economy gets better, commodities are going to go up in price because there are shortages. If the world economy does not get better, you should own commodities, because (central banks) are going to print more money," he said. "Real assets are the way to protect yourself." Rogers also said the price of gold will rise eventually above $2,000 an ounce. The price of spot gold on Tuesday hit a record high of $1,430.95 an ounce before falling back to close at $1,409.35. [source]
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| Palladium to the Moon & PAL to the Sun Posted: 07 Dec 2010 10:26 AM PST By John Townsend, The TSI Trader Many investors are aware of the price movement in gold and silver of late, but have you looked at Palladium? Palladium has exploded right past the entire field of commodities along with the little sister of Gold, which is Silver. Both precious metals have logged sizzling 80%+ gains, year to date. Palladium related mining stock North American Palladium Ltd (PAL:AMEX) has done even better than the little brother of Platinum, with a year to date gain of 90%.
This data, released literally a couple weeks ago, shows that for the first year of this decade, 2010 supply and demand for Palladium were in balance. We also note that for the first year in 10 years, supply was not greater than demand. One of the obvious precursors of significant price appreciation is a shortage of supply, and this development appears to be in the pipeline at this time. For starters, the enormous overhang of a multi-decade surplus of Palladium in Russia is now thought to be virtually exhausted. Secondly, as the primary demand for the metal is related to its use in the exhaust systems of vehicles (catalytic converter), the demand shortage scenario now appears inevitable with the projection of increased car production not only in theUnited States, but also China and India.
And finally, the demand side of the equation is being aggressively stretched by investment demand, ETFs, coins and jewelry primarily, as the precious metals secular bull market enters its 10th year. As a matter of fact, on November 30th the US Senateunanimously approved the coinage of a $25 face value Palladium bullion coin with a Mercury-head design and a weight of 1 ounce. And just the past week a new ETF launched that is backed by physical metal and weighted 55 percent in Silver, 33 percent in Platinum and 12 percent in Palladium. This ETF, issued by ETF Securities Ltd. of New York, trades with the ticker symbol WITE on the NYSE Arca exchange. Investors are increasingly seeking tangible investments that will hedge themselves from the present and increasing ravages of both inflation and the concurrent debasement of their currency. Without a doubt, the creation of new investment vehicles for the investment community will continue to bring in new investment dollars to the precious metal sector, but also effectively take a noticeable chunk of Palladium supply off the market. This is to say that Palladium that could have been used to make car mufflers, jewelry, dentistry alloys and a host of corrosive resistance applications, will either be sitting in a bank vault in Zurich to back up a new ETF fund or in someone's coin collection. The history of Palladium's price is interesting. Palladium was valued at $35 an ounce, along with Gold, from 1930 to 1961. Its price then slowly gravitated higher until it spiked to $150 in 1974 (Gold simultaneously spiked to $200), after which it resettled in the $60 range. But Palladium did not stay there long and as Gold made its early 1980 peak of $850, Palladium spiked even higher than previously, to $275. Following a return to the $60 range in 1982, Palladium was range bound between $100 and $150 until 1997. Beginning in 1997, Palladium began a sharp ascent from $100, reaching $400 by January of 2000. During the year 2000, Palladium virtually went parabolic, appreciating nearly 200% in a single year from $400 to well past $1,000 an ounce. During this same time frame (1997 – 2001), gold was basically asleep, rarely succeeding to even surpass $300 an ounce. The following chart yields a closer look at the more recent price history of Palladium. Additionally, I have superimposed the concurrent price performance of Gold (blue) onto this 10 year chart of Palladium (red) for relative comparison.
Palladium's highest price of $1,090 was achieved in January of 2001. This occurred, in large part, due to a threat Russia made to refuse selling its reserve stockpiles in the forthcoming calendar year of 2001. The Ford Motor Company contributed to the metal's panic due to this threatened potential shortage in supply, by hoarding Palladium for fear of not having enough Palladium for their car manufacturing usage with catalytic converters. It turns out that the Russians subsequently and 'magnanimously' decided to make their excess Palladium available for sale in 2001 (once they had scared the market price up from an anemic $100 to over $1,000). But then Ford was holding a bag that was filled with rapidly depreciating Palladium, as the Russian decision to provide more supply caused price to plummet. So Ford decided to unload its excess bounty, further driving the price of Palladium all the way down to $150 per ounce by early 2003. Palladium's high of March 2008 at $600 (coinciding with a spectacular C wave parabolic in both Gold and Silver) was unsuccessfully matched by the April rally earlier this year. However, the price action of the past three months has successfully taken out that previous landmark. The chart above shows that this important and major break out point ($600) occurred just a few months ago. It would appear, speaking as a technician that Palladium will now continue to rise until it reaches the 2001 all time high of $1,090. That feat, in itself, will amount to a 45% rise in Palladium price from current levels. Judging by the trajectory of Palladium's parabolic move in progress, which is now uninhibited by further price resistance levels, I cannot imagine it will be long before price arrives at a new all time high. That Palladium will appreciate another 45%, considering the current environment of currency debasement and inflationary pressures, is a given in my mind. What is interesting to ponder, however, is the miner North American Palladium Ltd. (PAL:AMEX) as an investment alternative to simply buying the ETF Physical Palladium Shares (PALL:NYSE Arca) or the 'soon to be minted' bullion coin. So let's now examine a 10 year chart of the only significant pure Palladium miner outside of either Russia or South Africa, North American Palladium Ltd. (PAL)
First off, we know that the price of Palladium is now higher than at any time since January 2001. But curiously, the stock price ofPAL is not anywhere near as high today as the numerous $12 peaks in the past decade. In fact, it is barely more than half that price at last week's close of $6.34. This observation alone tells me that a price of $12, while roughly a rise of 100% from current levels and commiserate with previous highs, is still not even close to a fair PAL price level, as the underlying Palladium metal is trading at 9 year highs - higher than at any time PAL has previously traded at $12. I have calculated that the average price relationship between spot Palladium price and PAL stock price for most of the past decade was about 50:1. For example, a stock price of $5 for PAL would roughly equate to a spot Palladium price 50 times greater, or $250. At today's spot price of around $780, PAL should be trading at $15-16. But honestly, North American Palladium Ltd (PAL) has not had a single profitable year in the past 5 years, at least. And yet the stock traded up to $10 and $12 on several occasions within this timeframe. Now guess what? This past quarter analysts expected the company to lose 3 cents a share. Instead, PAL blew out those estimates with a positive performance of 2 cents a share. Analysts are now expecting PAL to earn between 30 and 46 cents per share for 2011E. As PAL share price has a history of reaching $12 with negative earnings, imagine what the share price will be when the company starts logging in a string of explosively profitable quarters My hunch is that when Palladium retests its historic high of $1,090, as I believe it will sometime later this spring, PAL should trade at something in the neighborhood of $22. That would be an appreciation of nearly 200% from the current level of $7 per share. And this return would certainly annihilate the 45% anticipated return of simply buying some Palladium coins or the palladium ETFPALL. I have listened to the CEO's 20 minute December 2nd presentation at the Scotia Capital Mining Conference in Toronto, Canada. The webcast and accompanying slide presentation are available on the Company's website at www.nap.com. If you have 20 minutes and are interested in doing some due diligence of your own, I highly recommend you give his presentation a listen.
Generally speaking, when the True Strength Index (TSI) indicator is rising above the ZERO Crossover line, price is always rising. Also, when there has been a trend line break of the indicator, as I have drawn using a green line, it signals a significant and extremely reliable BUY opportunity. My disclosure it that I own some shares of North American Palladium Ltd. (PAL), but not nearly as many as I will after this weekend. John Townsend The TSI Trader is a website dedicated to the deployment of the True Strength Index (TSI) indicator for buy and sell signals related to gold's secular bull market. The TSI indicator is freely available at FreeStockCharts.
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| [Audio] King World News Interview: Jim Rickards: Part II, Tuesday, December 7, 2010 Posted: 07 Dec 2010 10:25 AM PST Discussing back on a Gold Standard
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| Ben Davies: Europe could have another unifying currency Posted: 07 Dec 2010 10:25 AM PST 6:20p ET Tuesday, December 7, 2010 Dear Friend of GATA and Gold: Writing at King World News, Hinde Capital CEO Ben Davies compares the European central bankers to parachutists who "zone out" and forget to pull their ripcords. But as the euro falters amid overwhelming debts, Davies writes, Europe still has available to it a unifying currency -- the old one, gold. Davies' commentary is headlined "Gold, Defaults, and a New Brady Bunch" and you can find it at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/7_Be... Or try this abbreviated link: CHRIS POWELL, Secretary/Treasurer 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 Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52% NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| Posted: 07 Dec 2010 10:22 AM PST Gold price eases on profit-taking after hitting new high The COMEX February gold futures contract closed down $7.10 Tuesday at $1409.00, trading between $1403.00 and $1432.50 December 7, p.m. excerpts: see full news, 24-hr newswire…
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| What Happens When Currencies Go Bust? Posted: 07 Dec 2010 10:00 AM PST I was telling the doctor that I distinctly heard a popping sound inside my head when I saw that the foul Federal Reserve had created, last week alone, another $24.2 billion in Fed Credit, which was instantly turned into money when the Fed bought $24.2 billion of US government securities, and all in One Freaking Week (OFW)! It made a kind of "sizzling" sound. Furthermore, a tortured howl of outrage boils up inside me (which tastes surprisingly like stale beer and pepperoni pizza) at the Sheer Inflationary Horror (SIH) of this creation of $24.2 billion in new money in One Freaking Week (OFW)!! The doctor dismissed my complaint, but billed me anyway, although you can obviously see the seriousness of it by the use of two exclamation points, and by the use of another one at the end of this sentence used to explain the significance of the prior exclamation points! It's self-proving! Proving! Perhaps you are saying to yourself, "This seems to be important, as indicated by the sudden plethora of exclamation points, but for reasons which are not clear. Why am I wasting my time with this Stupid Mogambo Crap (SMC) anyway?" If you are, indeed, asking yourself such a question, then lean forward and look deep, deep, deep into my bloodshot-yet-limpid blue eyes to see my Utter, Utter, Utter Sincerity (UUUS) when I tell you that "When the supply of money goes up, prices soon go up." And since prices going up is just another way of saying that a currency is doomed, a reader, Chet, wrote to Casey Research and said, "I fear that the dollar is doomed as are other fiat currencies, and time is getting short. So the question that came to mind is, what happens if one is invested in metal stocks or any vehicle that is denominated in a fiat currency, and that currency goes bust, blotto?" As a guy who has been both bust and blotto many, many times, often at the same time, I deem myself somewhat of an expert on the topics, and so, without waiting for either David or Terry to give their response, I jumped up and replied, "What happens is that the price of everything adjusts according to supply and demand, just like everything else in the whole freaking world always does all the time, you moron!" Chet apparently did not like my unsolicited response, and continued as if I had not just explained it, "What value does that investment retain? Does it become a total loss? Redefined into the currency of the locality that operations are in? Converted into some other New World Order monetary unit, SDR's or nationalization of any regional assets by the locals? Is this impossible to plan for?" Growing more frustrated by the minute, again I interrupt and politely say, "What in the hell is wrong with you, ya dimwit? The price, in the local currency, of everything will adjust. If bread is $2 a loaf, gasoline is $3 a gallon and gold is at $1,400 an ounce, will you better off if bread is $40 a loaf, gasoline is $60 a gallon and your gold is selling at $28,000 an ounce, assuming that prices adjust perfectly in proportion to the loss of buying power of the dollar due to over-issuance?" Suddenly, I realized that the reason that Chet was ignoring me was that I was reading it on the computer, and people are looking at me while I am yelling at my computer screen, "Chet, you're an idiot! The answer is no; thanks to gold, your financial situation will be exactly the same in terms of loaves of bread and gallons of gasoline!" Embarrassed, I sat back down and pretended nothing happened, so that after a few minutes, everyone went back to work. I pretended to go back to work, too, but secretly I was thinking to myself, "While he will be unchanged, those who do not own gold, silver and oil will be worse off, even if temporarily offset by still having $1,400 in cash instead of an ounce of gold, and who will, in turn, be better off than the vast, overwhelming majority of the population who will be the worst off, as they do not have gold, nor silver, nor oil, and this is to say nothing of them not having $1,400 in cash!" Unfortunately, these poor people still have to somehow pay $40 for a loaf of bread and $60 for a gallon of gasoline. Welcome to the wonderful world of inflation! Hahaha! And the reason that you should be buying gold, silver and oil against the onslaught of the Federal Reserve and the federal government against the value of the dollar will become very clear, very soon. In the meantime, rest your pretty head, my darling Junior Mogambo Ranger (JMR), as all you need to do is buy gold, silver and oil at your leisure, which is so easy that you, too, will happily exclaim, "Whee! This investing stuff is easy!" The Mogambo Guru What Happens When Currencies Go Bust? originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Is this Gold and Silver Breakout The Real Deal? Posted: 07 Dec 2010 09:20 AM PST In my studies of the financial markets, I have found the study of trading tactics to be similar to my studies of military history and sports. In 329 B.C., Alexander The Great, in his mid twenties, led his Army, through the Hindu Kush mountains ... Read More...
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| Three Things You Need to Know About the Chinese Economy Posted: 07 Dec 2010 08:58 AM PST We're starting to like this Julian Assange character, trumped-up rape charges in Sweden notwithstanding. This morning, thanks to the diplomatic cables made public by Assange's WikiLeaks, we're getting a better look at GDP numbers published by China. One of the cables tells of a dinner between the US ambassador to China and the head of the Communist Party. Li Keqiang is his name, and he's widely expected to become the new premier in a little over two years. Li says if he really wants the pulse of the economy, he needs to know just three things…
Heh, Li must be reading from our playbook: We check in from time to time on rail volume and other real-world economic indicators that can't be massaged by government statisticians. "By looking at these three figures," the cable says, "Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are 'for reference only,' he said smiling," Heh. Just like the Bureau of Labor Statistics! Addison Wiggin Three Things You Need to Know About the Chinese Economy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Paul Farrell's 10 Reasons Not To Buy Stocks Until After The Next Market Crash Posted: 07 Dec 2010 08:37 AM PST
Paul Farrell lights it up in his latest market commentary, which puts even some of the more hard-core realists out there to shame: "Wall Street is a loser. Stocks are Wall Street’s ultimate sucker bet. And it’ll sucker you again. You’ll lose, worse than in the last decade. Wake up before Wall Street banks trigger the next meltdown, igniting mass bankruptcy." Um, wow. And seeing how we have been saying that only absolutely immaculate top tickers should be in this market, we agree wholeheartedly with Farrel. And here are his 10 reasons to stay away until after the next crash, via Market Watch. 1. American stocks are a high-risk sucker bet Morici says “J.P. Morgan and Bank of America went through the entire third quarter without a negative trading day, no losing days on proprietary trades. Unless you believe in perfection, something stinks about the information they are using. If someone is winning all the time, then someone else is losing. That’s the ordinary investor. Stocks have become a rigged game.”
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| Posted: 07 Dec 2010 08:20 AM PST
Submitted by Jim Quinn of The Burning Platform Sudden Impact I'm a big fan of Clint Eastwood movies. Below are two of the greatest scenes in movie history, with two of the greatest, most quoted lines in history. The lines are: “Go ahead, make my day.” & “You’ve got to ask yourself one question: Do I feel lucky? Well, do ya, punk?” For some strange reason these two lines came to my mind as I watched President Obama announce the GREAT TAX COMPROMISE OF 2010. In both scenes the criminals came to their senses when confronted with Dirty Harry. Our criminal Congress and criminal President reached for the gun, because they feel lucky. We know what happens next when confronted with a .44 Magnum.
Obama and his new Republican friends agreed to add $1 trillion to the National Debt in the next two years. That is 30% of our entire budget and 7% of GDP. Here are some words of wisdom on this subject, spoken a few years ago: “Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.” – RON PAUL I have no issue with low taxes. I would like lower taxes. But, we’ve all become Keynesians if we agree with the “Compromise” that was reached yesterday. Republicans have not kept taxes low. They’ve insured that future generations will have higher taxes so they can enjoy the good times in 2011 and 2012. Watching CNBC last night was revolting. I thought Larry Kudlow was going to cum in his pants, he was so excited. His band of nitwits and numbskulls were positively giddy, as they were sure this would lead to a surging stock market.
A $1,000 tax cut comes to $20 per week for the average family. Now here is where the Federal Reserve and their politician protectors in Congress and the White House screw you while your not looking. As the world realizes that American politicians have no intention of cutting deficits, the USD will continue to weaken. This is what Ben Bernanke wants. It makes our debt burden easier to pay back while screwing our foreign lenders. The result of the weakening dollar has been a dramatic surge in oil and food prices. The average American family drives 25,000 miles per year in their two cars. The average car gets 20 mpg. Therefore, the average family is using 1,250 gallons of gas per year. Gas prices are at a two year high and will go higher as the dollar weakens. The entire $1,000 “tax cut” will be utilized to pay the higher price for gas. This doesn’t take into account the much higher food prices headed down the track, along with higher cost for all the crap we import.
The 10 Year Treasury surged 16 basis points this morning to 3.08%. This is the highest level since July and is now up .68% since Ben Bernanke indicated QE2 was on the way. QE2 was supposed to REDUCE long term interest rates. Mortgage rates are going up, not down. Housing prices are already in free-fall again. Higher mortage rates will destroy the housing market. Obama, Bernanke, and Congress have created the perfect storm. Keep partying today, for tomorrow will be painful.
Harry Callahan: Every day for the past ten years, Loretta here’s been giving me a large black coffee- except today she gives me a large black coffee and it has sugar in it. Alotta sugar. I just came back to complain. Crook: Say what, sucka? Harry Callahan: Well, we’re not just gonna let you walk out of here. Crook: Who’se we sucka? Harry Callahan: [slowly drawing his .44 Magnum] Smith and Wesson… and me. Harry Callahan: Go ahead, make my day. http://www.youtube.com/watch?v=2MJPAWG-BC0&NR=1
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| Gold Daily Chart and Silver Weekly Chart Posted: 07 Dec 2010 08:18 AM PST |
| Watch Out For A Fake Breakout In Gold And Silver Posted: 07 Dec 2010 08:17 AM PST In my studies of the financial markets, I have found the study of trading tactics to be similar to my studies of military history and sports. In 329 BC, Alexander the Great, in his mid-20s, led his army through the Hindu Kush mountains to Central Asia to expand his empire that covered 1 million square miles. He was a terrific military strategist who would often defeat his opponents psychologically in order to preserve his army, which for many years marched 30 miles a day across deserts and mountain ranges carrying heavy equipment. Alexander became the most powerful leader in his generation until his mysterious death at the young age of 32. One of his classic battle strategies consisted of ordering his men to blow the war trumpets and yell their battle cries night after night so that a besieged city would need to prepare for war repeatedly. Eventually, the foes would grow tired of this daily routine and Alexander would monitor exactly when the enemies stopped reacting. As soon as Alexander saw the window of opportunity he attacked fast and hard and would decimate his adversaries. Similarly in football, a defense will line up at the line of scrimmage often faking a blitz, forcing the quarterback to call an audible. Eventually, after faking a few times, the quarterback lets down his guard, and that's when the blitz comes and the major yardage loss occurs unexpectedly.
Similarly with the gold ETF (GLD). Last week it broke the August-to-November trend and showed a negative divergence, causing many technical analysts, myself included, to be concerned of a steeper correction. Since my October 4 signal, where I ventured out of bullion into the junior miners, the best way to play the gold market is through trading the oscillators. In August and September, gold had a steady climb higher. This was a trending market. We began seeing some key psychological bearish one-day reversals in October and the gold market began behaving volatile with a false breakout in early November. At that time I focused on my highly rated junior miners as I believed that their breakouts were more secure than the bullion due to the upside volume. After the false breakout we had high volume distribution days and broke the August-to-November trendline. The battle cry from the "bears" was heard. Bulls supported gold but the enthusiasm and volume was nowhere near the previous sell-off. Now we've just broken highs, but on recent breakouts there has been a lot of profit taking. This signals an area of key psychological resistance. A lack of volume on the breakout and high volume reversal is signaling that the bears' battle cry is heard again. Will this be the real deal?
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| Posted: 07 Dec 2010 08:12 AM PST by Addison Wiggin - December 7, 2010
 We're starting to like this Julian Assange character, trumped-up rape charges in Sweden notwithstanding.This morning, thanks to the diplomatic cables made public by Assange's WikiLeaks, we're getting a better look at GDP numbers published by China. One of the cables tells of a dinner between the U.S. ambassador to China and the head of the Communist Party. Li Keqiang is his name, and he’s widely expected to become the new premier in a little over two years. Li says if he really wants the pulse of the economy, he needs to know just three things…  Heh, Li must be reading from The 5’s playbook: We check in from time to time on rail volume and other real-world economic indicators that can’t be massaged by government statisticians. “By looking at these three figures,” the cable says, “Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are 'for reference only,' he said smiling,” Heh. Just like the Bureau of Labor Statistics! [Ed. Note: If he manages to extricate himself from legal troubles abroad or doesn't end up in a dark hole in Gitmo, we're considering inviting Assange to speak in Vancouver. Good idea, right?  Stocks are up this morning in reaction to the “Grand Bargain” between the White House and Republican congressional leaders over the "Bush era" tax cuts.In case you missed the hours talking that passes for analysis on television, here are the quick and nittys:
 For reasons that aren’t immediately apparent, gold is selling off from record levels reached earlier this morning. The spot price slid from over $1,430 just before 9 a.m. EST to below and is hovering at $1,415 as we write.Silver is at $30 on the nose… but that’s down from $30.70 earlier.  Oil likewise topped $90 a barrel for the first time since October 2008… and then retreated to $89.31.Yesterday, AAA estimated the nationwide average price for gasoline is $2.95 a gallon. If oil returns above $90 and stays there, this could be the first holiday season in which getting from here to there will cost more than $3 a gallon. Merry Christmas.  “Inflation is a tricky foe for investors,” writes Chris Mayer as he contemplates rising prices of precious metals, energy and other commodities. “It erodes our wealth slowly, unlike, say, a stock market crash. If a stock market crash is like jumping from a 60-foot building, suffering inflation is like drowning in a bubble bath.“Different assets and businesses behave differently in times of inflation. Some ride on the inflationary wave like a cork, others sink like a stone. And sometimes, it surprises you which do which.” For example, “gold popped like a cork in the 1970s,” Chris says. So you would think gold stocks did well. Yet gold stocks were not necessarily the best inflation hedge. If you put $100 in Newmont Mining, you had $149 at the end of the decade.” Bleah. In contrast, $100 put into shares of the grain processing giant Archer Daniels Midland would have multiplied nearly six times over -- as spotted recently by Horizon Asset Management’s Murray Stahl:  “The price of oil is a gold miner’s biggest expense,” Chris continues, “and oil went up a lot, too. And we know gold stocks deplete their reserves and must replace them. Newmont had to do this in a market in which gold properties also became much more expensive. “So you can see that Newmont’s profit margins were under pressure the whole decade. ADM had no such issues. “Don’t get stuck in the rut of thinking only ‘Inflation hedge means gold and silver.’ You’ll want (and need) more arrows in your quiver than that.” Just some food for thought as we head into a new year marked by rising prices. … Meanwhile, you can learn about one of Chris’s favorite speculations of the moment -- loaded with 20-bagger potential -- right here.  Between the potential inflation unleashed by the Federal Reserve and the continued jitters over the PIIGS nations in Europe, “lots of folks are pretty scared,” acknowledges Technology Profits Confidential editor Ray Blanco.“For the long-term technology investor, however," Mr. Blanco suggests, "I don't think it really matters. From an orbital perspective, these panics come and go. They always have. The technological arc of human history, however, can be seen to move in only one direction, and that is upward. “Granted, over the short term, it might have some negative effect, but even that remains to be seen. Breakthrough technologies, however, are an excellent way to weather an inflationary storm. We could even call breakthrough technology the ultimate hedge against inflation.” Ray cites the example of Microsoft, founded in 1975, when inflation averaged over 9%. “Granted, it wasn't publicly traded back then, but there were private investors. Imagine what a dollar invested in Microsoft in 1975 would be worth today. Just since its IPO in 1986, the company has turned a (split-adjusted) share price of 10.1 cents into over $26. “Even with the dollar losing about half of its purchasing power since 1986, that is still an inflation-adjusted gain of 13,000%. I can live with that. “The point is that early investing in companies that will transform the market will beat any devaluation caused by inflation.” Ray and Patrick Cox have assembled a list of their favorite inflation-busters right now. Here’s where you can learn more about them.  Oh, the irony! The Federal Reserve and the Treasury can’t even get printing money right. Literally. In February 2011, the Treasury was planning to dump hundreds of thousands of new, high-tech, impossible-to-counterfeit $100 bills from their Bernanke-approved helicopters. Unfortunately, the process of making them is so complicated the paper has started creasing inside the printing press. As much as 30% of the bills have blank spots. Nobody knows how to fix the problem yet. And sorting the “good” bills from the “bad” will take -- get this -- about a year. Even before this snafu, the printing costs of these bills came out to 12 cents each -- double existing paper currency. At 1.1 billion bills printed so far, that’s more than $120 million dollars in sunk costs -- plus, whatever it’ll cost to extricate the good. And shred the rest. Oh, yeah, “destruction of the currency” has a whole new meaning now. This metaphor is just too easy!  Our worst fears are being realized. After we showed a pie chart of the federal budget yesterday, several readers wrote in with their own ideas about how to shrink spending. Two of these emails were accompanied by spreadsheets.We're supposed to be helping you exploit investment opportunities in the markets... yet here we are debating public policy once again. Ugh.  “Let the federal government go back to the 2008 budget for the remainder of 2011,” wrote one of those readers, “and have every department start from zero and develop a budget in which they can justify with every dime to be spent for 2012.“The yahoos that sat on the deficit commission could not understand a zero-based budget if they saw one. Going back to the 2008 budget would reduce the deficit by at least $300 billion the remainder of this fiscal year ending September 2011. “Starting 2011 with a 2008 budget and requiring justification for every expenditure in 2012 will reduce the budget further for 2012. This process used year after year should balance the budget by 2016.”  “My plan,” says the other spreadsheet-maker, “is simply to cut 5% of the fat out of our bloated expenditures across the board each year until we have a balanced budget.“Scenario No. 1 assumes no growth in tax receipts. In this case, the budget is balanced by 2021 (11 years). In scenario No. 2, I assume a very modest 1% increase in GDP each year and that 'trickles down' into an additional 1% increase in tax receipts. In this case, the budget is balanced in 10 years. “The last scenario assumes an increasing rate of growth in tax receipts as we eliminate the government's inefficient allocation of resources and replace it with growth in productive assets. This scenario balances the budget in nine years.”  “I’m just a working man, like 95% of the population that still has a job, and I don’t get this government,” writes a reader who did not prepare a spreadsheet.“Headline: ‘Payroll Tax Break, Cut Social Security by 2% for the Working American.’ “Why? How stupid is that? This is the first year that Social Security went into the red! So the plan is to make it worse? Medicare -- I pay for that also, why didn’t they cut that? Gotta pay for the Obama health plan! “I am not an economist or an accountant or a banker, but the plan to cut the taxes just kicks the can down the road, again more IOUs to the Social Security Administration. “'What they cut, they must borrow. What a great plan. Figures don’t lie, but the liars figure. “I gross $60,000 a year and don’t itemize. I would pay more if anyone can have the guts to develop a real plan, and I hate taxes, especially the fed's inflation tax. So which one should I pay? A direct tax or the coming inflation tax.” The 5: Too bad it's not an either/or proposition. Instead, with "compromises" like the one announced this morning, you're headed for both. Regards, Addison Wiggin The 5 Min. Forecast P.S.: Talks are under way in Geneva between Iran on one side and the United States, Britain, France, Germany, Russia and China on the other… to discuss Iran’s nuclear program. No one is expecting much progress, and in the meantime, events in the Middle East are building toward an explosion that’ll make today’s $90 oil look like a pleasant memory. Byron King explores what’s going on, and how to bullet-proof your portfolio in this presentation.
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| Two steps forward, one back… Posted: 07 Dec 2010 08:00 AM PST by Amanda Cooper … With the U.S. dollar set to come under more pressure from the prospect of rising money supply, gold should reap the benefits of investors seeking an alternative to volatile currencies, analysts said. However, the end of the year traditionally brings with it less liquidity and greater potential for rapid shifts in price direction, meaning that gold could see more setbacks before resuming its uptrend. "Tactical investors have turned positive on gold and silver and increased their long exposure. In our view, positioning does not look excessive, suggesting that the sector could attract further near-term flows," said Credit Suisse analysts in a note. "However, with markets closing in on critical price levels, risks of investors' taking profits have increased as well." In investment news for gold, China's Lion Fund Management Co., which is launching the country's first gold fund worth up to $500 million, is examining a dozen gold-backed exchange-traded funds on the global market as potential targets. [source]
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| Don’t Bet on New Zealand’s Recovery Posted: 07 Dec 2010 07:58 AM PST On Wednesday, December 8, the Reserve Bank of New Zealand will announce its latest interest rate decision. At first glance, it might appear that a small rate hike is in order, considering the country's rising costs of living. But dig a bit deeper, and the overwhelming likelihood is that the bank will not change rates at all – placing a lot of short-term selling pressure on the New Zealand dollar (NZD). It's a shocking turn of events for a country that enjoyed a nice rebound. After contracting by an average of about 0.4% a quarter, the Pacific economy enjoyed an average of 0.5% gain over the last 12 months. But the recovery isn't expanding fast enough. In fact, it's quite the opposite – it has been slowly contracting since the middle of this year. A big part of the problem is consumer spending. On paper, sales were strong last quarter, despite the country's high unemployment rate – 6.4% heading into the fourth quarter. But it turns out the boost in spending wasn't triggered by optimistic shoppers. Instead, it was a reaction to something that stands to take a big bite out of future retail sales: an increase in the goods and services tax (GST). New Zealand's GST – a fancy way to say "sales tax" – recently jumped from 12.5% to 15%. So retail sales surged as consumers stocked up on things at lower prices. Without the surge, retail spending may have been flat to negative for the last three months. Meanwhile, in another sign of trouble, building consents (new housing authorizations) have dropped by 20% since the first quarter. This is a big deal because, as in the United States, new homes are an important spending generator. Needless to say, the lackluster sales have helped keep New Zealand's inflation in check. Consumer prices have remained well below the Reserve Bank of New Zealand's benchmark target of 2-3%. In fact, the overall inflation has increased by only 1.6%. The numbers aren't suggestive of deflation, and they do indicate a rising cost of living. But just barely – overall, they aren't inflationary. With prices at below target levels, there is no justification for higher interest rates in the short term. Weak manufacturing isn't helping the case for higher rates, either. For three straight months, the New Zealand manufacturing sector has shown nothing but contraction. According to the country's manufacturing index published last month, factories saw little growth in new orders and delivered goods. At the same time, the monthly production index dropped to a reading of 49.7. Anything below a reading of 50 is considered a contraction. This means that companies are completing current product projects but have little in the pipeline for the sector's future growth. A quick look at the country's two trade partners shows why. New Zealand's export market is primarily driven by trade with Australia and the United States. Combined, the economies are responsible for over one-third of New Zealand's exports. And with both economies in a slowdown, you can bet that the country's manufacturing sector will continue to remain in the doldrums. Put it all together, and the short-term future of the kiwi dollar looks grim. Softer economic times in New Zealand. Low rates of inflation. Stable to low manufacturing growth. Add on a sidelined Reserve Bank of New Zealand, and it's making the case for a weaker New Zealand dollar exchange rate even more realistic. Richard Lee Don't Bet on New Zealand's Recovery originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Posted: 07 Dec 2010 07:53 AM PST  Hickey and Walters (Bespoke) submit: Below are charts of both gold and silver going back to 1975. As shown, gold has plowed through the $1,000, $1,100, $1,200, $1,300, and now $1,400 level over the past year, while silver has charged to $30. Gold is at record highs, however, while silver has a ways to go to get to its high of $48.70 seen in January 1980. click to enlarge Complete Story »
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| Gold Mining Mergers And Acquisitions In 2011 Posted: 07 Dec 2010 07:37 AM PST Video Interview With thestreet.com on some of the potential targets for majors in 2011.
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| Ben Davies - Gold, Defaults & A New Brady Bunch Posted: 07 Dec 2010 07:10 AM PST  With volatility in the gold and silver markets, Ben Davies, CEO of Hinde Capital has done another excellent piece exclusively for the King World News blog. Here is a portion, "One reason cited for a "no-pull" is the skydiver is preoccupied with a new activity and loses track of time, but a more alarming reason is what is termed a brainlock or a "zoneout". Even experienced skydivers are prone to an overload of stress hormones that literally freezes the mind. When you are speeding at a terminal velocity of 120mph towards earth this can result in a fatal conclusion."
This posting includes an audio/video/photo media file: Download Now |
| Posted: 07 Dec 2010 07:01 AM PST courtesy of DailyFX.com December 07, 2010 07:42 AM Daily Candles Prepared by Jamie Saettele Gold has registered a fresh all-time high but the incredibly extreme divergence with momentum remains in place. At this point, coming under 1384 would signal bearish potential. 1500 would be the next resistance level....
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| Fiscal Discipline and Unintended Consequences Posted: 07 Dec 2010 06:55 AM PST By Captain Hook, Treasure Chests It's no secret Ron Paul is expected to chair the Monetary Policy Subcommittee starting next year, and that he intends to properly audit the Fed and US gold reserves as initial steps in attempting to return America to some degree of fiscal discipline. Because there can be little doubt an expanding bureaucracy has hit the limit in terms of what the system can take, which is why you will never see the Fed voluntarily abandon QE2. And this is especially true because of the deflation (of everything from currency to population) peak oil guarantees, not to mention other unintended consequences increasing fiscal restraint would bring. The bottom line here is the bureaucracy will continue to monetize the debt on an increasing basis until the system implodes on itself, which will be the result of uncontrollable rising interest rates and gold prices, which according to Mark Lundeen should be considerably higher. Impossible? It could be argued it's already happening, where this week for example, despite a generous POMO schedule this week bonds are falling anyway due to the reporting of uncontrollable price increases and increasing sovereign credit concerns that will surely not disappear anytime soon. So please, don't be confused by all the propaganda, no matter what the bureaucracy leaders tell you, money printing and monetization practices will remain relentless, although we may get a taste of austerity not many will like as we move into next summer as Mr. Paul does his damdest to fix the world, which will of course prove dangerous to our fiat currency economies at the time. Crashing stock and bond markets in North America will certainly make 'austerity' a four letter word as process unfolds, however there is no guarantee another bloated fiat currency system would emerge on the other side of an unwinding, making 'debt' an actual four letter word people (creditors) will undoubtedly be paying closer attention to under such circumstances. In the meantime however, prices have not been falling to support the bureaucracy's phony inflation reports, so with the retail trade 'all in' (to stocks) as reflected in US index open interest put / call ratios, explained here last week, it's time for a short-term correction. At least that's what it better be, or the equity complex will be in real trouble a bit early from a cyclical perspective, where we are anticipating a terminal high in stocks during the first quarter of next year, as per the count and patterning presented in the charts below. First we have the long-term Super-Cycle Grid that shows although more room exists for gains, we are entering a cyclical (time-line) turning point. (See Figure 1) Figure 1
The second chart zooms in on the lower degree waves to look for clues in the most probable count, etc., displayed below, which in my view would confirm the rising and high probability of an important top being put in place sometime in the first quarter of next year, or shortly afterwards. What we have unfolding here is a typical zigzag, which is a five-wave sequence separated by a corrective three-wave sequence, followed by another five-wave sequence, which you can see has yet to unfold. I have studied the count here for some time and see no other alternative; especially given the big picture where we are expecting a test of the 2009 lows eventually (the larger degree a – b – c sequence in red), so none will be provided (See Figure 2) Figure 2
And as you may know, I also expect the same patterning and timing from gold (and silver) running into next year based on historical precedent (the last big top was in February), where although the cycle might run longer this time because of the higher degree (Grand Super-Cycle?) of the present move, still, some degree of top can be expected at this time, and I can tell you why. Why then? Because our buddy, Ron Paul, will likely be successful in getting enough people who matter pushed over into the Fed audit / austerity camp by then, which will be bad news for the aggregate bubble economy. And again, even if he is ultimately not successful in this regard, he will be making enough noise when he is first appointed chair to get people taking him seriously, which at a minimum will push prudent traders into defensive postures, which means lightening up on equities, precious metals, and anything else associated with the inflation trade. Remember folks, you read this here first. Good investing all. Captain Hook The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Wednesday, November 17th, 2010. Copyright © 2010 treasurechests.info Inc. All rights reserved. Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests. Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. We are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.
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| America’s Next Great Commodity Boom Posted: 07 Dec 2010 06:53 AM PST If you're interested in making money in energy commodities over the coming decade, I have two important numbers for you… The first is the price of natural gas in the US – which is less than $4.50 per million British thermal units (mBtu). The second is the price of natural gas in Asia, where people will pay $10 per mBtu for natural gas they import from overseas. This is a disparity someone can make a lot of money on. The only reason it exists at all is that the natural gas market is mainly a local market. It is not as easy to ship natural gas across the seas as it is to ship oil. You have to supercool it so it liquefies. Then you can put it on a tanker and ship it to a terminal where your buyer can re-gasify it. This is the liquefied natural gas (LNG) trade. There are problems. US energy companies, before the shale gas boom changed everything, thought the US would need to import natural gas. So the US has about 10 LNG import terminals and two more in the works. Now, with a natural gas glut in the US, these terminals are pretty much useless. Owners of these terminals want to refit the terminals to turn them into export terminals, where the gas is liquefied and shipped out. They are now petitioning the US government for export licenses. As The Financial Times reported, "The US could soon be competing with Russia and the Middle East to supply the world with natural gas, a shift in production that would reshape energy markets over the next decade." Even if the US exported just 10% of its natural gas, it would become the largest exporter of LNG in the world. Few countries can match the US in natural gas resources or low costs. So where will the natural gas go? This is an interesting question, because it yields some surprising answers. I attended the ASPO conference last month in Washington, DC. (ASPO stands for the Association for the Study of Peak Oil and Gas.) One of the more fascinating presentations was by Jonathan Callahan, founder of Mazama Science. He looked at natural gas through the lens of the import/export markets. This is a good thing to do for any commodity because it can tip you off to what's happening in that market. When China went from being one of the biggest exporters of soybeans to the biggest importer, the effect on the agricultural markets was huge. Any time a big exporter becomes a big importer, you can bet it spells opportunity for that commodity. China, for instance, remains a big importer of oil and iron ore, which has been good for investors in those commodities. China will very soon become a big importer of coking coal – which is used to make steel. So will India and Brazil. This is good to know if you're an investor, as it will drive demand for coking coal. So Callahan looked at natural gas through the same kind of lens. He created these charts that capture the natural gas import trends in some of the world's largest economies.
You can see that the UK was an importer of natural gas through the 1980s and 1990s. Then there was the North Sea boost, matched by a step-up in consumption. Finally, as the North Sea supplies dwindle, the UK has gone deep into the red as an importer. This chart exhibits a pattern we see time and time again. Consumption is sticky and stubborn. It doesn't go down much. Using this same analysis, Callahan looks at all the big producers and consumers of natural gas. The big buyers here are Japan, South Korea, and Taiwan. All of the gas they import comes from LNG tankers. But what about, say, China? Note that China is flipping from a net exporter to a net importer – which means China is just becoming a net buyer of natural gas. Per-capita consumption, Callahan points out, is only a fraction of China's neighbors'. He predicts – and I agree – China will become a huge importer of natural gas. Combine China with Japan, Taiwan, and South Korea and Callahan concludes, "Clearly, East Asian demand for LNG will not be letting up anytime soon." Callahan's data suggest this trend is present all around the world…from the Middle East to South America to Europe. The impact on the global market seems clear. "If shale gas doesn't turn out to be as prolific as hoped," Callahan wraps up, "we can expect to see increasingly expensive natural gas in the next decade. Forewarned is forearmed." (I encourage you to check out his website – mazamascience.com, where you can see his presentations and read his blog.) So put together Callahan's data on exports and imports with the glut in the US and the lack of export terminals. I think it's pretty clear we'll see more export terminals in the US. It's too big of an opportunity to ignore. The US could become the leading exporter of natural gas in the next decade. It's also pretty clear that worldwide, we'll see the LNG trade grow significantly to make up the shortfalls that are emerging in South America, Asia, Europe, and the Middle East. It's a great time to buy infrastructure firms that build these plants. It's also a great time to look at companies with lots of North American natural gas reserves. With natural gas in the dumps right now, these assets are cheap…but they won't stay that way for long. Regards, Chris Mayer America's Next Great Commodity Boom originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| These Charts Suggest Gold and Equities Going Higher into 2011 Posted: 07 Dec 2010 06:50 AM PST Technical analyses of the future direction of the U.S. dollar, the price of gold and the American and Chinese stock markets suggest that the near term pattern for each should be somewhat choppy but with a favorable upward bias for gold and ... Read More...
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| Rosenberg On Why Fighting The Fed In Real Terms Has Been Very Successful Posted: 07 Dec 2010 06:49 AM PST
Today, David Rosenberg has some good commentary which proves that those who say to not fight the Fed, may be 100% wrong when it comes to fighting adjusted for inflation, or as the case may be - deflation (conveniently, few talk about what bothers even seasoned hedge fund managers such as David Einhorn - i.e., "corn and oil"). And Rosie is spot on: the deflation in all credit-intensive purchases is accelerating, and will accelerate because the only thing that matters, as we have claimed for over a year, is the shadow capital/credit contained in the shadow banking system. That is the number that is collapsing at a rate of more than half a trillion per quarter. No matter what Bernanke does to M2 will even remotely offset this deleveraging deluge. Which is why we have long claimed that the only trump card Bernanke has is to devalue the dollar (both relative to other currencies and absolutely - relative to gold) to the point that its fate as a reserve currency is imperiled, ostensibly leading to a monetary crisis. One is free to name the resulting chaos in dollar denominated prices as one sees fit. But the bottom line is that as long as the shadow banking system continues to contract, which it will for years as the bulk of the funding came from European and Japanese banks: both of which are now gripped in austerity, and not really flooded with leveraged depositor money, everything else is merely a short-term blip on a long-term decline in both economic output and market terms. Also known as noise. As for Rosie's amusing views on why Fighting the Fed has actually been a very successful strategy in real terms, read below: DEFLATION REMAINS THE PRIMARY RISK The San Francisco Fed just published another great report titled The Breadth of Disinflation. The fact that one of the most reliable research departments within the Fed system could publish such a report two years into the greatest experiment with fiscal, monetary and bailout stimulus and reflationary policies speaks volumes. Frankly, what it tells us is that the 4.3% yield on the long bond is extremely attractive in real terms. The report found that prices are deflating now for 17% of the goods and services that people consume — “evidence that price declines are widespread.” At the start of the recession, only 34% of the consumption basket was posting disinflation or slowing price momentum. That number is now at 72% — nearly three of four items in the basket is disinflating. This is the same ratio we saw in 1981 but back then we had Volcker doing everything he could to kill inflation. Today we have Bernanke doing everything within his powers from a 0% funds rate to radical expansion of the central balance sheet to reignite inflation and all he can do is throw matches on a wet towel. Don’t fight the Fed, indeed. Since the first cut in the Fed funds rate on September 18, 2007 …
Well done! Below we again highlight the appropriate SIRP strategy for such an environment:
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| Gold And Silver China Panda 2011 Coins Design Posted: 07 Dec 2010 06:41 AM PST The People’s Bank of China is scheduled for December 10th 2010 to release a set of 2011 Gold And Silver Panda commemorative gold and silver coins. The total of 10 sets of commemorative coins, include seven gold and three silver coins sets. Source: Chngc The biggest change comes in… …1 oz Silver China Panda coins [...]
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| Posted: 07 Dec 2010 06:32 AM PST By Howard S. Katz, The Gold Speculator Friday's Wall Street Journal was full of "optimistic" news for the U.S. economy. It reported: "Retailers' reports of robust November sales offered more evidence that the lackluster U.S. economy may finally be gaining momentum, despite stubbornly high unemployment. "According to 27 retailers tracked by Thomson Reuters, sales at stores open a year or more rose 6% last month, sharply exceeding a year-earlier gain of just 0.5%. Online retailing also showed sizable gains." "Shopper Splurge Buoys Hopes," by Ann Zimmerman and Elizabeth To chart retail sales and present this as something good for the whole country is lunacy, the kind of lunacy knows as Keynesian economics. Retail sales are of interest to retailers. The country does not get any richer via an increase in retail sales. It must be asked, who is doing this extra buying and where are they getting the money? The answer, in this case, is easy. The Federal Reserve is printing the money out of nothing. Can simply printing money create real wealth? Last week we saw Thomas Jefferson's view that it cannot. And the United States, under the wise leadership of such men, emerged as the leading economy in the world. Today the idiots are crying for a government "stimulus" of the economy, a system which has been tried in a great many countries over the years and has been an absolute disaster every time. So what is this pickup in sales in November? It is simply the first bit of the newly created money to start making its way through our society to the point where it is visible in the economic indicators. That money will soon cause a general rise in prices, and the result will be that you get poorer. So the retailers get richer, and you (and others like you) get poorer. Can anyone explain how this is good for society as a whole. It is difficult to understand how idiocy like this gets parroted throughout our society when the only proper place for it is the mental institutions of said society. Less than 10 years ago the pages of the Wall St. Journal were full of articles warning of a massive "deflation," mostly focused on commodities. Here is what happened. The (less than) 50 point decline in the CRB in early 2001 was enough to set the WSJ off kicking, screaming and predicting "deflation." Article followed article threatening a terrible disaster. By the end of the year, the CRB was very close to its long-term low just above 180. Today it is flirting with 600. And what was the Wall St. Journal's comment about the 400 point rise over the past 9 years? Not a word.
Again, in late 2008, there was a similar commodity decline. You remember the media hysteria which triggered that decline. Large numbers of commodity speculators were frightened into selling by lies in the major media. Believe the media and lose your money. That decline has now been almost completely recovered, and it is not difficult to predict (unless one writes for the Wall Street Journal) a massive commodity advance which will make the 6 month decline of late '08 appear petty by comparison. What do we know about countries which experience long, steep declines in prices? Well, the primary example of this is the United States, which experienced a 30 year decline in prices from 1866 to 1896. An item which cost, on average, $1.00 in 1866 was down to 33¢ in 1896. This was the period which marks the transition from an agricultural to an industrial economy. It was the period of great inventors, such as Thomas Alva Edison, who created new products which dramatically improved the lives of the average person. It was the period when millions of people flocked to America from all over the world because, in a figurative sense, the streets were paved with gold. America's great prosperity during this period resulted from the fact that the gold standard had been restored (after the Civil War) in 1879 and remained in force for 54 additional years. Now what about countries which experience long, steep increases in prices? The most dramatic case which comes to mind was Germany in 1914-23. During this time average prices rose by 1 trillion to one. The middle class was wiped out, and the people, in anger and frustration, voted for Adolf Hitler, who was also a paper money advocate and who in 12 years turned the country into a mass of rubble. Even worse than Germany was modern Zimbabwe, where prices went up by more than 1 trillion to 1. Life expectancy dropped from 60 years to 40 years. Unemployment reached 90%, and there were reports of starvation and cholera. This happened just a few years ago, and yet there was hardly a word in the American media. A very dramatic case was that of Britain. Under its gold standard Britannia ruled the waves and remained very close to the U.S. in economic progress. But in 1931 she gave up gold, and in 1946 Britain elected a group of Keynesians to run the country. Almost immediately, the British pound collapsed. From being the leading country of the world, Britain became just another European country. From the empire upon which the sun never set, Britain set. You can see the same thing happen with the United States. Starting one year after the abolition of the gold standard (or the last, slender tie to gold) real wages in the United States started to decline. When I discovered this (in the late 1970s), I sent out a press release to the 100 biggest newspapers in the country (virtually all of them claiming to be pro-labor). Wasn't this the biggest news of the decade? Yes. Did any of the papers print this news? No. Where can you find truth these days? In the nation's newspapers? Not a chance. A collection of liars and frauds. So you see that more human actions are motivated by the desire for wealth than most people will acknowledge. For example the paper aristocracy's desire is for more paper money, and this enriches them in the same manner it enriches the counterfeiter. They consume goods which they have purchased away from you with their counterfeit money. You get poor, and they get rich. The paper aristocracy, by the way, is my name for those people who benefit from paper money and who exert their political force to keep it going, by analogy with the medieval aristocracy, who also controlled the government and used it to take from the poor and give to the rich. The nation's newspapers, on the other hand, have a different scam. They pose as the champions of the poor (to get readers) while they are pandering to the super rich (again the paper aristocracy). So the last thing they want to do is to alarm their readers by telling them that they are getting poorer. This is why the nation's media cooperate in one amazing lie after the other. Of course, as a speculator in the nation's financial markets, you cannot afford to deal in lies. You must see reality as it is. When on Sept. 15, 2008 the New York Times declared a financial crisis with "deflationary" overtones, speculators in these markets believed the Times, panicked and rushed to sell. Crude oil (which the Times had been bulling in May) had hit a high of 147 in July of that year; it fell to almost 35 by December. The CRB fell almost in half. Those speculators who believed the Times were slaughtered. The Times, itself, did not fare too well either. The price of their own stock (in which they had invested heavily) declined from 40 to 4, and they had to take a loan from Mexican billionaire, Carlos Slim. Slim says that he is focusing on "mainly mining." He is ranked by Forbes as the richest man in the world (ahead of Bill Gates), and recently rumors circulated that he was about to buy out the Ochs-Sulzberger family's control of the Times. But the question for you, dear speculator, is where do you want to put your money? Below we have the 10 year chart of the price of gold, and it is obvious which financial good is burning up the track. During this time the stock market is flat, but gold keeps climbing to new highs.
The chart above shows the 10 year bull market in gold. Of course, no tree grows to the sky, and over time any financial good will have both ups and downs. But it should be obvious what we first noted in December 2002; gold is on the move. It is an old saying of market speculators that the trend is your friend. This means that trends continue on for far longer than anyone expects, but the trading community refuses to believe. Finally, after the move has gone beyond what everyone expects, there comes a time when the speculators begin to believe. In the first grand cycle bull market in gold (1970-80), this happened in 1979. The newspapers, which were bigoted and biased against gold, were shouting, "double digit inflation." The price of gold was advancing, sometimes by $50 (8%-10%) per day. That day will come for the present bull market – but not today. I have been studying the gold market for over 40 years, and my experience is summed up in my newsletter, the One-handed Economist. This newsletter is published every other Friday (posted on our website the following day) for $300 per year. Special bulletins are published when the market is moving rapidly, the most recent being Nov. 30, 2010. To subscribe, visit my website, www.thegoldspeculator.com, and press the Pay Pal button. Or, send $290 ($10 cash discount) to The One-handed Economist, 614 Nashua St. #122, Milford, N.H. 03055. The markets are moving rapidly, and now is the time to heed the old adage, he who hesitates is lost. Thank you for your interest.
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| The Gross Mismanagement of Mexico’s Oil Industry Posted: 07 Dec 2010 06:00 AM PST Mexico should be rich. Instead, the country provides a disheartening example of what author P.J. O'Rourke might call "making nothing from everything." We've been trekking around the Pacific Coast – well, a very small part of it – for the past week or so. The stretch between Puerto Vallarta and Sayulita – about 40 miles – boasts some of the most pristine coastland your Aussie-born editor has ever seen. It is the type that might inspire California's "trustafarian" community to erect multi-million dollar beachfront mansions, around which they would shoot opening credit footage for teen reality shows about the trials and tribulations of the good life. But down here, the towns are tiny, peaceful and conspicuously devoid of L.A.-style bling. Life is simple. Only the occasional fishing or surfing village punctuates enormous swaths of virgin, oceanfront real estate. The locals, at least from what we've seen, are an especially hard-working bunch. By day, they toil under the red-hot sun…and then, when it goes down, they toil some more. What's more, unlike their depressed, though highly privileged cousins north of the border, they smile like it's a national sport. But so what? If a tropical clime and a broadly grinning local workforce were the only ingredients necessary to bake a cake of national economic prosperity, Cuba might be the preferred dessert of the Caribbean. Instead, it barely passes for an econo-Twinkie. (The Mexican captain of a fishing boat we took over the weekend made the point for us: "Ok amigos. Today we go to a beautiful island for your pleasure," he told the eager crowd. "Are you ready for this? We go to Cuba! Haha… Just joking! We wouldn't do that to you. You're our amigos!") The real wealth, of course, is to the east, in the Gulf of Mexico. The Cantarell Field, in particular, should have been a boon to this nation. And for a while, it was. Ironically, however, nothing suffers at the hands of bureaucrats quite like raw, capitalistic opportunity and the success it threatens to visit upon ordinary, voting citizens. With roughly 18 billion barrels of recoverable oil (35 billion in total), the Cantarell Field is roughly one third larger than Alaska's mighty Prudhoe Bay (with a "measly" 12 billion). What's more, unlike the extreme arctic conditions in Alaska and the sheer remoteness of the project (at 650 miles north of Anchorage), Mexico's black gold sits just 50 miles off the coast…and in Caribbean waters of scuba-friendly temperature. Such is the richness of the Cantarell Complex, and the luck of Mexico, that it didn't even take a geophysicist or highly paid geologist to discover it. Instead, Rudesindo Cantarell, a fisherman, noticed that his nets were actually clogging up with the black stuff. It seems the natural oil seeps were literally begging to be discovered. Cantarell couldn't have missed it if he tried. But the story gets even more interesting. The holes in the rock – or pores – where the oil is located appears to be – wait for it – part of the rubble formation from the asteroid impact that created the Chicxulub Crater some 65 million years ago. More amazing still, many scientists actually credit this as the (or one of the) "extinction event/s" that eventually wiped out the dinosaurs. Call it a gift from the heavens (unless, that is, you happened to be a God-fearing dinosaur). With heaven and earth conspiring to deliver such a bounty to the Mexican people, one is tempted, perhaps beyond better judgment, to ask: What could possibly go wrong? Enter Pemex, the nation's state-owned petroleum company. Again, it seems there is no privilege so vast as to render it beyond the destruction of the "people's" government. Pemex was "created" back in 1917 when, bowing, as politicians seem genetically preprogrammed to do, to public pressure, President Cárdenas embarked on the state-expropriation of all resources and facilities and, in the process, nationalized both United States and Anglo–Dutch companies operating within its borders. Despite international boycotts, Pemex led Mexico to become the world's fifth largest oil-producing nation. Now, Fellow Reckoner, what do you suppose a wide-eyed group of bureaucrats might do with a plump, oily egg-laying goose? Invest in exploration and development of nearby fields? Farm out some of the work to foreign companies with the necessary expertise and proven track records to bring the stuff to market? Look to secure the future of the voters who put them in office by shoring up the foundation of the nation's largest tax paying company? Ha! Don't make us laugh. Why, they sharpen the cleaver…and sit down to enjoy a one-time-only feast. And after the last feather is plucked and morsel consumed? Hey, this is politics! That's a problem for the next bum to deal with. Despite annual revenues in excess of $75 billion dollars, Pemex is only able to survive today through its immense borrowing. Pemex pays out over 60% of its revenues in taxes and royalties. Those receipts, in turn, account for around 40% of the federal government's entire budget. As such, the state-owned dinosaur is now over $40 billion in the hole (so to speak) and, to make matters worse, is facing inexorable production decline in many of its fields, including that giant asteroid baby, Cantarell. "Mexico's oil industry is in crisis," Byron King, the intrepid editor of Energy & Scarcity Investor, recently explained to his readers. "Indeed the grim numbers come from no less a source than the Mexican Energy Ministry. Production statistics make it clear that Mexico's overall oil output is declining rapidly – with the word 'crashing' coming to mind as one views the chart [below].
"After decades of production," continues Byron, "Cantarell is getting long in the tooth. Oil output is declining rapidly. Cantarell is depleting at an astonishing rate. Meanwhile, the yield from new Mexican oil fields is simply not making up the difference." Cantarell "peaked" around 2003…and only then after a massive nitrogen injection project to boost production. Since then, it's been in steady decline, from a high of 2.9 million barrels per day to just 464,000 per day currently. "Due to falling oil output, especially from offshore, Mexico will likely cease being an oil exporting nation by 2015," concludes Byron. "This looming problem holds dire implications for the national balance sheet of Mexico, as well as – by implication – for US energy and national security." We can only hope the "next bum" has better ideas about how to maximize Mexico's vast oil potential than all those preceding him. Judging by their track record, that shouldn't take much. Then again, we are talking about politicians here. Joel Bowman The Gross Mismanagement of Mexico's Oil Industry originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Get Your Gold Out of the Banking System: Jim Rickards Posted: 07 Dec 2010 05:52 AM PST "New law lets U.S. Treasury decrease gold and silver coin production. The scramble for physical metal intensifies. J.P. Morgan Getting Squeezed In Silver Market? The euro's end game... and much, much more. " Yesterday in Gold and Silver The gold price didn't do a whole heck of a lot during Monday trading anywhere. The only price movement of any note occurred was that $8 spike to its high of the day at $1,428.70 spot in electronic trading in New York shortly before 4:00 p.m. Eastern time yesterday afternoon. Gold close up about $10 on the day. The silver price ran up a decent amount during Far East trading, but ran into some selling pressure around 3:00 p.m. Hong Kong time... about an hour before London opened for their trading day at 8:00 a.m. GMT. From there, silver slid lower... and didn't show any signs of life until the London silver fix at noon local time [7:00 a.m. in New York]. Then, it fits and starts, the price worked its way slowly higher...h...
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| SIGNS ARE STARTING TO FALL INTO PLACE Posted: 07 Dec 2010 05:50 AM PST By Toby Connor, Gold Scents
 Today will mark the 14th day of the current daily cycle. We will soon enter the timing band for the next cycle low. The dollar is now deep into the timing band for a cycle low and could bottom sometime this week. Sentiment is starting to get frothy. Traders are starting to find reasons for why gold and silver will just continue higher indefinitely. (JPM short squeeze) All signs that an intermediate top is approaching. Trust me we will get a profit taking event. They come like clockwork about every 20-25 weeks. I went over in the weekend report what to look for to spot a potential top. Stay on your toes here folks!        Toby Connor A financial blog primarily focused on the analysis of the secular gold bull market. If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.
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| The Futility of Tax Cuts Without Spending Cuts Posted: 07 Dec 2010 05:49 AM PST Well… The dollar rally that was going on yesterday morning didn't have the legs to carry on, and by mid-afternoon we were watching the currencies rebound… I truly feel that this time the currencies were led to higher ground by gold and silver! The rallies in gold and silver yesterday were the things that legends are made of… Silver hit a 20-year high, and gold raced past its previous high water mark of $1,414.07 set on Friday… And the shiny metal is back at it again this morning, setting yet another record level of $1,426.30… So… What got the risk assets all lathered up around mid-day yesterday, I hear you asking… Well… Can you say tax cut extensions? I knew you could! The agreement to extend the Bush tax cuts two additional years was reached yesterday… I guess during a recession with 25% unemployment, this is a good thing… But… It doesn't change a thing regarding the deficit problems of the US. So much for the Debt Commission's months of work, eh? It was like a, "Thanks, but no thanks, Debt Commission"… I had a media guy call to interview me yesterday, and he asked me if the tax cut news was going to be good for the dollar… I told him that it might, but that it would only be short-lived, as this is not good news for the dollar in the long run. Well, the markets are looking at this differently than little old me… (HA!) I look at it in the long run… The markets are looking at it right here, right now, and what it does to promote growth. Hey! Tax cuts (which these really aren't, as they were cut eight years ago, these are extensions of those cuts), are nice on the pocketbook, eh? But go back eight years and track the dollar's value since those original tax cuts were announced… You see, short term, the tax cut can promote growth, and bring in receipts… But unless there are spending cuts to go along with the tax cut, the nation's debt picture is damaged… And since we've not seen a spending cut of any magnitude…we're stuck with a debt picture that is more than damaged… It's unsustainable! And the "welfare state" continues to grow… Now, I know this is going to sound insensitive, but I don't mean it to be… The unemployment benefits were also extended past 99 weeks… Just keep adding up the debts… Our grandkids will be left holding the bill… But that's the mentality of kicking the can down the road… Just keep kicking it, so that it's someone else's problem… Unfortunately, that game can't go on forever… And unfortunately for us that can keeps growing in size. Ty sent me a note yesterday… "Greenlight Capital head David Einhorn says gold is going higher, interest rates are way too low, and the US government has no intention of paying its bills." So… Meanwhile, grandma's holding off the Indians…and the dollar is on the run from the currencies and precious metals once again. This "risk on" trading this morning is so strong, that the Aussie dollar (AUD) is rallying toward parity again with the US dollar, in the face of a Reserve Bank of Australia (RBA) meeting that left rates unchanged (no surprise there), but just had to say that "rates are appropriate"… An Aussie analyst that I read a lot, Sue Trinh, now believes the RBA will be on the sidelines of rate hikes until the middle of 2011. For now, I'm going to leave the light on for a rate hike in the first quarter of 2011… But, despite the RBA's statements, the Aussie dollar is nearing parity once again… And so is the Canadian dollar/loonie (CAD)… The Bank of Canada (BOC) meets today to discuss rates, and like I said yesterday, of the central bank meetings this week (the ECB and Reserve Bank of New Zealand also meet) this is the only one that has a slim chance of a rate hike… But that's not what's lit the fire under the loonie… The price of oil reaching $90 has the loonie screaming higher versus the green/peachback. There's a meeting going on while I type my fat fingers to the bone, with Eurozone Finance Ministers meeting to discuss the mechanism and the size of the mechanism to combat the debt problems in the future… I was talking about this yesterday when I told you that the euro was getting sold on the fact that the Finance Ministers weren't singing from the same song sheet… Well… I guess the markets gave up on that, because the euro (EUR) began to rally in the afternoon. The Eurozone Finance Ministers will announce today the formal approval of the aid package for Ireland… And Ireland, in turn, is expected to vote and pass its 2011 budget…a budget that I'm sure contains a ton of austerity measures that will most likely not be well received by the Irish people. Speaking of the Eurozone… I made the statement in my presentation in Cabo San Lucas last month, that we could see some of the members of the GIIPS leave the euro in the next few years… A gasp came from the crowd…and I then tried to assure the audience that while initially it would be bad for the euro's value, that in the long run it would be far better for the euro to get rid of the rift raft… I've explained this before, but here goes again… It's like the buffalo herd… The herd can move faster once the slowest member is killed… But that's not going to happen today, tomorrow, or even in the next year, I don't think… So let's worry about tomorrow when tomorrow comes… Today is what's on our plate! And so it goes… With the potential next periphery county in the Eurozone to have the media focus on their problems… Mario Draghi, governor of the Bank of Italy, said Italian banks have survived the financial crisis in relatively good shape, but some will need to strengthen their finances to comply with capital and liquidity rules outlined by the Basel Committee on Banking Supervision. "Some banks need to work more in order to quickly strengthen their capital base," he said. This is how it starts…and then people begin to look under the hood a little more carefully… OK… Enough of that! Well… I guess the Big Ben Bernanke talk on 60 Minutes didn't get the bond guys too lathered up, for Treasury yields are back to rising again this morning, in the face of bond purchases that will be made by the Bernank through quantitative easing… I think we could see this continue, for if I were a foreign investor, I would certainly demand a higher yield in Treasuries before I would risk capital there. It's just like I always tell you about Mexico… Investors have been burned in Mexico so many times over the years that the Mexican peso (MXN) needs to pay an interest rate that includes a "risk premium." Without the additional "risk premium," investors balk at investing in pesos… And right now, Mexican rates are too low, with no "risk premium" at all… And… The peso wallows around 12.5. Twelve years ago, when I was in Cancun, the peso was less than 10… But back then interest rates included the risk premium. Sorry for the long explanation, but that's the kind of thing I think the US will head into in the future, as investors will demand a "risk premium" due to the size of the debt issuance by the US. Then there was this… I saw this yesterday and I had to go yell at the wall! A study by Daniel J. Wilson of the San Francisco Federal Reserve Bank, suggests that the net job creation from the $814 billion stimulus bill passed in February 2009, was zero by August 2010. In the first year, the stimulus "saved or created" 2 million jobs (not 4 million as repeatedly claimed by the Administration), but this number proved to be short-lived, paying for temporary jobs, at a very high cost of $400,000 per job "saved or created." By August 2010, the impact of the stimulus on net job creation had disappeared. This is an astounding result, which destroys the Paul Krugman argument that the economy would be so much better right now if only Congress had approved much more spending in February 2009. Double the initial spending, double the number of temporary jobs, with likely the same net result by this point in time, or a trivial number of "permanent jobs created." In fact, the unemployment rate is at a substantially higher percentage rate today at 9.8% than when the stimulus bill was passed. And that's using the hedonically adjusted BLS method of calculating unemployment… As I told you yesterday, the "real unemployment rate" is nearing 25%… To recap… The dollar rally ended yesterday mid-day, as the US came to an agreement to extend not only the Bush tax cuts, but the unemployment benefits past 99 weeks. The risk-takers see this as great for global growth, and so it is a "Risk On Day"… Gold and silver led the charge against the dollar yesterday, with silver reaching a 20-year high, and gold setting yet another all-time record high. The RBA lefts rates unchanged and the Bank of Canada meets today. The Futility of Tax Cuts Without Spending Cuts originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." More articles from The Daily Reckoning….
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| Oil Demand’s Triumphant Return Posted: 07 Dec 2010 05:49 AM PST Lost in the shuffle of the European debt woes, a second round of quantitative easing and gold's record run has been the resurgence in global demand for oil. Global oil demand is strong; in fact, it has never been stronger. Oil demand during the third quarter of this year was up 3.7 percent, the fourth-straight quarter of growth.
Who's behind this increase in demand? Emerging markets. You can see from the chart that global oil consumption has bounced well off of early 2009 lows and now exceeds pre-crisis consumption levels. Consumption in the developed world, represented in the chart by the Organization for Economic Co-Operation and Development (OECD) countries, has been flat for the past 18 months and remains roughly 8 percent below 2007 levels.
While developed world demand has flatlined, emerging markets have captured a significant share of global oil consumption over the past three years—narrowing the usage gap between the two from roughly 12 million barrels per day in 2007 to 4 million barrels per day currently. This week, Dr. Fatih Birol of the International Energy Agency presented his bullish long-term outlook for oil demand to analysts at Barclays, predicting that global energy demand will grow by 36 percent between 2008 and 2035. Birol says China and India will lead the way but the Middle East won't be far behind. He gave three reasons for the demand leadership of emerging markets: Economic growth, population increases and heavy fuel subsidies in many countries will give consumers a buffer from rising oil prices. Chinese oil demand is expected to grow at the fastest rate of any country in the world at 10.4 percent this year. Figures on China's share of global oil demand growth range between 25-40 percent but there's no question that there is still substantial room for Chinese demand to grow. Fabulous growth in auto demand will likely be the catalyst for China. Birol says that 700 out of every 1,000 people in the U.S. and 500 out of every 1,000 in Europe own cars today. In China, only 30 out of 1,000 own cars and Birol thinks that figure could jump to 240 out of every 1,000 by 2035. When Japan hit $5,000 of GDP per capita, oil demand grew at a 15 percent annual rate for the next ten years, according to oil-industry consultant firm PIRA. It was a similar story for South Korea. China reached the $5,000 GDP per capita mark in 2007 but oil demand has only grown at a 7 percent compounded annual growth rate. This highlights China's superior growth potential if China is to catch up to historical patterns. Macquarie expects global oil demand to grow by 2.3 percent on a year-over-year basis in 2011, which the firm says would be met with drawdowns in oil stockpiles, higher prices and an OPEC response. However, OPEC's ability to control the oil market is in a precarious state. Ten of the cartel's 12 countries will produce less oil in 2011 than they did in 2008, with Iraq and Nigeria the only countries expected to see production increases. OPEC still controls 40 percent of the world's oil supply but its spare capacity peaked in the early 1980s and is projected to fall an additional 2 million barrels per day in 2011, leaving the cartel with little ability to manipulate production as demand continues to grow. Rising demand from emerging markets and a lack of maneuverability by OPEC should result in a very tight global oil market. We expect oil prices to continue trending upward throughout 2011. Regards, Frank Holmes, P.S. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk. Oil Demand's Triumphant Return originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day." More articles from The Daily Reckoning….
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Gold futures fell as investors stepped up sales following a six-session rally to a record. On the Comex, gold has jumped 29% this year, heading for its 10th straight annual gain. Earlier, gold reached an all-time high of $1,432.50 an ounce as the dollar fell to a three-week low against the yen and weakened against most other major counterparts after President Barack Obama agreed to extend tax cuts…
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