Gold World News Flash |
- Are U.S. metal-shorting banks moving to hide their positions outside the country?
- Gold Equities' Upside Greater than Gold
- Bernanke Denies Printing Money. Mogambo Not Convinced.
- Why CNBC's 'Gold Bubble in 2011' Prediction Is Nonsense
- Doug Kass: Gold Will Fall 25% in 2011
- The Gold Industry's 3 Best Management Teams
- Will The U.S. Hit The Wall In 2011?
- Is the End Game of Wikileaks Internet Censorship?
- Silver COT Analysis: Structural Changes Are Bullish
- Will the Economy Go Buy Buy During this Holiday Season?
- Crude Oil Rallies to Top End of Range, Gold Rises on Investment Demand
- Gold Seeker Closing Report: Gold and Silver Gain About 0.5%
- A Vote for Gold
- Bert Dohlmen On Gold And Precious Metals Manipulation
- Is JP Morgan Shifting Its Silver And Gold Shorts To Non-US Domiciled, And Thus Unregulatable, Banks?
- Silver: Steady as she goes . . .
- MONDAY Market Excerpts
- Graham Summers’ Free Weekly Market Forecast (Fed vs Euro Edition)
- How Bears Are Moving in on Gold
- Cutting Out the BS of Crisis-Era Bailout Activities
- Gold Stocks Upside Greater than Gold Bullion Price
- USAGOLD News, Commentary and Analysis
- Fed Shortsighted QE Policy Fuels the Continuing Gold Price Rise
- Shortsighted Fed Policy Fuels the Continued Rise in Gold
- Gold Daily and Silver Weekly Charts - Bloomberg Apparently Does Not Like Gold
- Contrarian Indicator: When Gold ATMs Go Global
- Gold Unchanged
- Six Reasons Why Claude Resources Is a Buy
- Nic Lenoir's Outlook For The Week Ahead
- Interview: Precious Metals Expert Alka Singh Talks Gold, Silver
- Why Gold is About To Power Higher to Complete a Big Rally
- Unmasking The Unintended Consequences Of US Central Planning
- Merry Monday – Will Santa Deliver Dow 11,500?
- Year-End Precious Metal Insurance Sale
- The Half-Truth and Nothing But the Half-Truth
- I disagree. I believe we are still in the stealth phase, the first significant correction won’t come until we’re through $100 (I would define ‘institutional money’ as pension money, and we have not seen a penny of that coming into Silver yet)
- Guest Post: The Bennie Who Stole Christmas
- Big Chunky Bits of Silver (**)
- SILVER
- Why I keep buying Silver and Gold
- US Wealth Distribution: Where Zombies Go to Feast
- The Holiday Grind Is Here For 10 Days Only – Are You Ready?
- Structural Unemployment for “Dummies”
- Gene Arensberg: Bullion banks still reducing silver shorts
- Join GATA at the Vancouver conference in January
- Paul says he'll ask Fed about transactions with foreign banks
- “We are Now Demonetizing Money”
- Oil, Gold and Silver Miner Projections for the Year of the Golden Bunny
- Calculating Mesabi Trust's Q4 Distribution
- Silver Managed Money Longs: Get Ready for a New Rally
| Are U.S. metal-shorting banks moving to hide their positions outside the country? Posted: 20 Dec 2010 06:07 PM PST GATA Director Adrian Douglas, publisher of the Market Force Analysis letter, today published a letter he has sent to U.S. Commodity Futures Trading Commission member Bart Chilton, disclosing that even as the gold and silver short positions of U.S. banks have been declining over the last year, gold and silver short positions lately have been increasing dramatically among banks headquartered outside the United States.
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| Gold Equities' Upside Greater than Gold Posted: 20 Dec 2010 06:03 PM PST Frequently prospecting for new opportunities in natural resource-rich nations, Rodman & Renshaw Senior Analyst Alka Singh is just back from Argentina. The Gold Report caught up with her to sift through her thoughts on the precious metals industry. Her current objective is to seek out gold and silver producers with growth potential beyond the price appreciation of commodity metals.
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| Bernanke Denies Printing Money. Mogambo Not Convinced. Posted: 20 Dec 2010 06:02 PM PST No matter how much I try to calm down, I can't stop being angry about the unbelievable, towering arrogance of the horrid Ben Bernanke, chairman of the Federal Reserve, when he actually said, "One myth that's out there is that what we're doing is printing money. We're not printing money. The amount of currency in circulation is not changing"!!
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| Why CNBC's 'Gold Bubble in 2011' Prediction Is Nonsense Posted: 20 Dec 2010 06:01 PM PST Doug Eberhardt submits: The fact that anyone can call gold a bubble shows how much they truly misunderstand gold. CNBC correspondent Bob Pisani recently made such a claim when he gave his 2011 stock predictions, including the statement, "the gold bubble will pop." For every other prediction Pisani made, he gave some sound reasoning for his thinking, whether right or wrong. That's what you do when you make predictions, you state what you believe will occur and back it up with reasoning. Complete Story »
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| Doug Kass: Gold Will Fall 25% in 2011 Posted: 20 Dec 2010 06:00 PM PST Cullen Roche submits: Doug Kass of Seabreeze Partners says gold is going to be highly volatile in 2011. He says prices will routinely move $75-$100 on a daily basis and that prices will “plummet” 25% at some point in 2011 compared to today’s closing price. Complete Story »
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| The Gold Industry's 3 Best Management Teams Posted: 20 Dec 2010 05:46 PM PST Kapitall submits: The following is a list of the most effective management teams in the gold industry, as defined by the return on assets, return on equity and return on invested capital ratios. To develop the list, we only focused on management teams that have outperformed their competitors on all three ratios over the past 5 years. Complete Story »
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| Will The U.S. Hit The Wall In 2011? Posted: 20 Dec 2010 05:29 PM PST I have been pointing out for quite some time now that the real systemic problems in the U.S. completely dwarf the financial/economic problems confronting the EU. It could even be argued that the media and Wall Street are incessantly shoving the news on Europe in front of us everyday in order to deflect the hoi polloi's attention from domestic realities. But the truth of the matter is that the budgetary and financial disaster swirling around California or Illinois individually is bigger than that of the PIIGS collectively. In fact, without Government help, there are several States that would likely be bankrupt. Here's a quote from John Williams' Shadowstats.com which I sourced from Jim Sinclair (http://www.jsmineset.com/): Economist John Williams has been warning of an economic collapse for a few years. In his latest Shadowstats.com report, he says, ". . . the U.S. remains the proverbial elephant in the bathtub in terms of pending effective sovereign bankruptcies." Williams thinks it will all hit the fan within 6 months and is predicting a dollar catastrophe. Europe is a sideshow to the coming main event. Williams says, "The various European crises remain an intermittent foil for the U.S. dollar, pulling market attention away from the unfolding solvency crisis in the United States and a likely move to massive selling against the U.S. currency. Accordingly, high risk of the early stages of a hyperinflation (see Hyperinflation Special Report) beginning to unfold by mid-2011 continues." I'm sure most of you have seen the segment on 60 Minutes this past Sunday which focused on the financial catastrophe facing several States.Meredith Whitney stated that she believes there will be several State bankruptcies and municipal bond defaults in 2011. I personally think the Fed will accelerate the printing press and the Government will implement another stimulus plan in order to avert the collapse of several States. This will feed into the John Williams scenario of a massive sell-off in the dollar and precipitate the early stages of hyperinflation. And with that holiday cheer, I thought I would leave you with a good chuckle from "Family Guy," in honor of my completing the first unit (11 weeks) of Italian at the Italian Institute in Denver: 
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| Is the End Game of Wikileaks Internet Censorship? Posted: 20 Dec 2010 05:24 PM PST
F. William Engdahl’s first book, A Century of War: Anglo-American Oil Politics and the New World Order, discussed the roles of Zbigniew Brzezinski and George Ball and of the USA in the 1979 overthrow of the Shah of Iran. Engdahl claims that Brzezinski and Ball used the Islamic Balkanization model proposed by Bernard Lewis to accomplish US policy goals in Iran. Not coincidentally, Brzezinski was a key figure in US President Barack Obama’s 2008 election campaign and played a key role in helping former US President Jimmy Carter get elected. In 2007, he released a book that exposed the massive dangers of GMO foods called, Seeds of Destruction: The Hidden Agenda of GMO.
One of F. William Engdahl’s latest articles is titled “Wikileaks, a Big Dangerous US Government Con Job”. In this article, Engdahl implies that Wikileaks is a US government-run propaganda and disinformation operation with an end goal of restricting freedoms on the internet. Here are some of the key excerpts from this article.
"A closer look at the details of what has so far been carefully leaked by the most ultra-establishment of international media such as the New York Times reveals a clear agenda. That agenda coincidentally serves to buttress the agenda of US geopolitics around the world from Iran to North Korea. It is almost too perfectly scripted to be true. A discontented 22-year old US Army soldier on duty in Baghdad, Bradley Manning, a low-grade US Army intelligence analyst, described as a loner, a gay in the military, a disgruntled “computer geek,” sifts through classified information at Forward Operating Base Hammer. He decides to secretly download US State Department email communications from the entire world over a period of eight months for hours a day, onto his blank CDs while pretending to be listening to Lady Gaga. In addition to diplomatic cables, Manning is believed to have provided WikiLeaks with helicopter gun camera video of an errant US attack in Baghdad on unarmed journalists, and with war logs from Iraq and Afghanistan. It is almost too perfectly scripted to be true. A discontented 22-year old US Army soldier on duty in Baghdad, Bradley Manning, a low-grade US Army intelligence analyst, described as a loner, a gay in the military, a disgruntled “computer geek,” sifts through classified information at Forward Operating Base Hammer. He decides to secretly download US State Department email communications from the entire world over a period of eight months for hours a day, onto his blank CDs while pretending to be listening to Lady Gaga. In addition to diplomatic cables, Manning is believed to have provided WikiLeaks with helicopter gun camera video of an errant US attack in Baghdad on unarmed journalists, and with war logs from Iraq and Afghanistan.”
"Manning then is supposed to have tracked down a notorious former US computer hacker to get his 250,000 pages of classified US State Department cables out in the Internet for the whole world to see. He allegedly told the US hacker that the documents he had contained "incredible, awful things that belonged in the public domain and not on some server stored in a dark room in Washington, DC." The hacker turned him in to US authorities so the story goes. Manning is now incommunicado since months in US military confinement so we cannot ask him, conveniently. The Pentagon routinely hires the best hackers to design their security systems. [Assange] selects as exclusive newspapers to decide what is to be leaked the New York Times which did such service in promoting faked propaganda against Saddam that led to the Iraqi war, the London Guardian and Der Spiegel. Assange claims he had no time to sift through so many pages so handed them to the trusted editors of the establishment media for them to decide what should be released. Very “anti-establishment” that. The New York Times even assigned one of its top people, David E. Sanger, to control the release of the Wikileaks material. Sanger is no establishment outsider. He sits as a member of the elite Council on Foreign Relations as well as the Aspen Institute Strategy Group together with the likes of Condi Rice, former Defense Secretary William Perry, former CIA head John Deutch, former State Department Deputy Secretary and now World Bank head Robert Zoellick among others. Indeed a strange choice of media for a person who claims to be anti-establishment. But then Assange also says he believes the US Government version of 9/11 and calls the Bilderberg Group a normal meeting of people, a very establishment view. Most important, the 250,000 cables are not "top secret" as we might have thought. Between two and three million US Government employees are cleared to see this level of "secret" document, [1] and some 500,000 people around the world have access to the Secret Internet Protocol Router Network (SIPRnet) where the cables were stored. SIPRnet is not recommended for distribution of top-secret information. Only 6% or 15,000 pages of the documents have been classified as even secret, a level below top-secret. Another 40% were the lowest level, "confidential", while the rest were unclassified. In brief, it was not all that secret. What is emerging from all the sound and Wikileaks fury in Washington is that the entire scandal is serving to advance a long-standing Obama and Bush agenda of policing the until-now free Internet. Already the US Government has shut the Wikileaks server in the United States though no identifiable US law has been broken."
"The process of policing the Web was well underway before the current leaks scandal. In 2009 Democratic Senator Jay Rockefeller and Republican Olympia Snowe introduced the Cybersecurity Act of 2009 (S.773). It would give the President unlimited power to disconnect private-sector computers from the internet. The bill "would allow the president to ’declare a cyber-security emergency’ relating to ’non-governmental’ computer networks and do what’s necessary to respond to the threat." We can expect that now this controversial piece of legislation will get top priority when a new Republican House and the Senate convene in January. US Department of Homeland Security, an agency created in the political hysteria following 9/11 2001 that has been compared to the Gestapo, has already begun policing the Internet. They are quietly seizing and shutting down internet websites (web domains) without due process or a proper trial. DHS simply seizes web domains that it wants to and posts an ominous "Department of Justice" logo on the web site. See an example at http://torrent-finder.com (My note: Do click on this link. It's worth checking out.)"
On the political front, I agree with Engdahl’s assessment of Assange’s leaked government cables. In the cables I have seen discussed in various newspaper articles thus far, there is nothing more than the occasional embarrassing quote, nothing top-secret, and nothing remotely damaging to any US allies revealed in any of these supposedly top-secret government cables. And regarding Assange’s threat of leaking thousands of confidential documents contained in a 5 gigabyte drive regarding a big US bank believed to be Bank of America as an “anti-establishment” act, I’m not buying it. According to a Forbes interview, Assange stated that his leak would “give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume.” I say, so what if this big leak Assange is in possession of pertains to Bank of America and if it reveals documents that result in the demise of BofA? If this is how this drama plays out, this event would ultimately be more pro-establishment and pro-elite than anti-establishment. The demise of BofA would only mean that JP Morgan, as they have already done with Bear Stearns and Washington Mutual, would have yet another opportunity to stamp out their competition, swoop in like vultures, and pick up BofA’s carcass for pennies on the dollar. Or perhaps Goldman Sachs will be given this carcass to pick clean. Either way, if this happens, it consolidates power for the elites at the top and could not have worked out any better if Assange was a paid employee of Goldman Sachs or JP Morgan. Remember that BofA bought up Merrill Lynch when Merrill Lynch failed, so an acquisition of BofA would translate into a delayed acquisition of Merrill Lynch.
In the book, “The Great Depression of the XXI Century,” Tanya Cariina Hsu wrote:
“In 1907, J.P. Morgan, a private New York banker, published a rumor that a competing unnamed large bank was about to fail. It was a false charge but customers nonetheless raced to their banks to withdraw their money, in case it was their bank. As they pulled out their funds, the banks lost their cash deposits and were forced to call in their loans. People therefore had to pay back their mortgages to fill the banks with income, going bankrupt in the process. The 1907 panic resulted in a crash that prompted the creation of the Federal Reserve, a private banking cartel with the veneer of an independent government organization. Effectively, it was a coup by elite bankers in order to control the industry."
"When signed into law in 1913, the Federal Reserve would loan and supply the nation’s money, but with interest. The more money it was able to print, the more "income" it generated for itself. By its very nature, the Federal Reserve would forever keep producing debt to stay alive. It was able to print America’s monetary supply at will, regulating its value. To control valuation, however, inflation had to be kept in check. The Federal Reserve then doubled America’s money supply within five years, and in 1920, it called in a mass percentage of loans. Over five thousand banks collapsed overnight. One year later, the Federal Reserve again increased the money supply by 62 percent, but in 1929, it again called the loans back in, en masse. This time, the crash of 1929 caused over sixteen thousand banks to fail and an 89 percent plunge on the stock market. The private and well-protected banks within the Federal Reserve system were able to snap up the failed banks at pennies on the dollar."
If this sounds familiar, it should. This seems to be the blueprint by today's banking elites for today’s banking industry as well. During the Bank Panic of 1907 and the Great Depression, JP Morgan was one of the biggest beneficiaries of a panic that many historians claimed they, along with the Federal Reserve, helped to manufacture. If the future scenario regarding Wikileaks's release of incriminating big bank documents plays out anywhere close to the one I presented above, Julian Assange would, in essence, be performing a massive favor for the most favored private banks of the Federal Reserve system.
Admittedly, like millions of others, I was fooled by Wikileaks's intent in the beginning. But the more and more I research them, the more it seems as though Wikileaks is cooperating with governments and banks rather than serving as their adversary or as their watchdog to increase transparency. Now, if Mr. Assange releases cables that expose detailed correspondences between the US Federal Reserve and JP Morgan regarding silver price suppression schemes or how Goldman Sachs deliberately releases misinformation about gold prices, or if he releases diplomatic cables exposing secrets between the US and Israel that have been concealed from the public, I might start once again believing that the goal of Wikileaks is to provide greater transparency about government and banker actions.
About the author: SmartKnowledgeU is a fiercely independent investment research & consulting firm dedicated to helping Main Street avoid the fraud of Wall Street.
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| Silver COT Analysis: Structural Changes Are Bullish Posted: 20 Dec 2010 05:10 PM PST Once again, structural changes in the COT continued in the latest report, week ended December 14th 2010, most notably in the Adjusted Net Open Interest (3,318 contracts decrease). This is one of the more important line items to keep an eye on as it has been showing the total size of the Commercial position in silver declining. Unwinding of the massive short position by the commercials continues to contract by both the 4 largest and 8 largest commercial banks. Though bullish, the falling open interest isn’t nearly as substantial as the COT reports, as the adjustments for spreading need to be stressed to properly put this into perspective. At first glance, a change of 7,530 is presented, but after removing the changes in total spreading, namely Non-Commercial, we end up with a decrease of less than half of what was initially reported. While concentration levels by these two groups remain elevated, this isn’t necessarily a bad thing due to the aforementioned declining adjusted net open interest. The most current week's Commitment Of Traders Report, however, showed a decrease of the Largest 4’s net short position of 1,889 contracts or nearly 9.45 million ounces. This rather larger weekly decrease is likely due to the unwinding of many JP Morgan contracts (which they recently announced they were going to be doing). While this decrease was rather bullish, it is even more so when adjusted net open interest is taken into account seen through the declining concentration levels of the 4 largest (declined .16% w/w and 3.65% over the last two weeks). Finally, we total the commercial position held short vs. world silver bullion again decreasing to 28.70%. Complete Story »
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| Will the Economy Go Buy Buy During this Holiday Season? Posted: 20 Dec 2010 04:18 PM PST
The market crept up again today like Jessica Simpson's pants or like Pete Townshend at a boy scout overnight (though all for research, wink wink). With the year ending next week and investor's preparing for tonight's lunar eclipse where the Earth will happily play Lucky Pierre between the Moon and the Sun (and this hasn't happened during the winter solstice since 1638, or back when gold was the preferred currency, liberals tried to control thought in Massachusetts, and Larry King was patching up another marriage, so um, Money McBags guesses some things never change), the market is destined to float along as portfolio managers are more likely to challenge Lexington Steele to a cock off than they are to do anything to cause volatility right before bonus season. So feel free to ignore the market movements over the next week and a half and rebalance your portfolio for the first of the year.
With a dearth of macro news today (in fact macro news was scarcer than panties on Britney Spears and even scarcer than astatine), the only news Money McBags could find relevant to the markets was that retail sales had another strong holiday weekend. The strength of retail sales remains cockposterously confounding to Money McBags, even more confounding than the efficient market hypothesis or this food insurance thing (that video was some kind of farce, right?).
How is it possible that according to some guy named Craig Johnson, the President of some place called Customer Growth Partners, holiday sales this season will surpass 2007's total sales record of $508B (and Craig, Money McBags hates to tell you how to run your business, but if you bill yourself as a consumer and service strategist, perhaps you should have a website that doesn't look like it was made in 1994 using MS-DOS and whatever carayola crayons were left over in the box)? This just doesn't make sense to Money McBags and he proposes that instead of having smart people waste their time proving that genes cause infidelity (especially these jeans), we get them to look in to how people can block out potential disastrous future events (like spiraling debts, diminished retirement accounts, and Nikki Cox turning in to Carrot Top. Oh Nikki, you once had such great promise) and continue to spend on shit they don't need and can't afford. Money McBags just doesn't get it, but then again, he doesn't get Dancing with the Stars or Paul Krugman OpEds, so perhaps he is the one who is in the wrong.
Anyway, according to something called SpendingPulse (and someone needs to take Money McBags' pulse over all of this spending), eCommerce sales rose 13.5% and apparel sales were up 9.8% from the start of the holiday season through Dec. 11 compared with the same period a year ago So just think how strong sales will be once QE3 hits. ComScore showed online sales in the most recent week ended Dec. 17 grew 14% to $5.15B and there were four individual days last week where sales topped $900MM (those days of course included "Green Monday", "Plastic Tuesday", and "Bankruptcy Wednesday"). But hey, as long as people will keep selling hamburgers today for payment on Tuesday, and as long as banks don't take any risk when lending since Uncle George and Uncle Obama have had their backs, then there is no reason the economy can't go to cockfinity. So buy away, buy away.
Oh yeah, Money McBags loved this story about middle of the road bankers (known collectively as Jefferies) who are getting their cuff links all in a bunch about the prospects of potentially not getting bonuses. Money McBags would feel badly for them if they 1. Did anything productive for society (like writing dick jokes on the market from their dining room table). 2. Didn't just have their base pay doubled to make up for the lack of bonuses. 3. Needed that money to release Angeline Moncayo nude pictures. But since none of those are true, Money McBags will gladly give them a full case of "who gives a shit" should they require further compensation.
In Europe, stocks closed at 27 month highs because apparently no one gives a shit about Ireland and their lack of liquidity. In a position paper published on its website (and Money McBags only hopes that position was the Iraqi Drill Press), the ECB said legal flaws in Ireland's bailout legislation could affect its rights over collateral security which is the multi-syllabic way of the ECB saying "there is a bit of a chance we may have fucked up."
In the market, NFLX's CEO called out noted turd in the punchbowl Whitney Tilson (who never met a copy of Securities Analysis whose pages he couldn't stick together), about Tilson's NFLX short. The CEO said competitive threats, bandwidth costs, and the CFO departure weren't issues and that as soon as people in China get running water, and then electricity, and then TVs, and then wifi, NFLX's valuation will look only mildly expensive.
Elsewhere, AXP was down ~3% after Stiffy Nicolaus wondered if consumers will start leaving home without it (and that is the Jay Leno joke of the day). The analyst warns that now that the Fed has proposed a cap on debit card interchange fees merchants are forced to pay, it could cause merchants to steer consumers away from credit cards. Stifel Nicolaus said the company is "more exposed" following last week's Federal Reserve proposals, though not as exposed as Snooki will be when she drops in the ball (and Money McBags finds that a nice change of pace since usually the balls drop in her), and worries that cutting interchange fees could be next for credit cards.
Finally, Chesapeake energy chesa-peaked up 7% after it was learned that Carl Icahn built up a ~6% position in the firm and Raytheon announced they are paying an 8.5% premium of $490MM for APSG. APSG provides surveillance and cybersecurity equipment to the Pentagon to make sure viruses aren't downloaded on to important government servers after intelligence officers play the NSFW silicon challenge.
And Money McBags has plenty more today at the award winning When Genius Prevailed where he opines about ZAGG's management and his interest in RICK. So tell a friend or just some douche on an email chain and feel free to follow Money McBags on the twitter or the facebook since the only price is your dignity.
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| Crude Oil Rallies to Top End of Range, Gold Rises on Investment Demand Posted: 20 Dec 2010 04:01 PM PST courtesy of DailyFX.com December 20, 2010 08:51 PM Crude got an extra boost from the January to February roll, with prices now set to test resistance at $90 again. Gold is holding below $1400 despite the fact that ETF holdings reached a new record. Commodities – Energy Crude Oil Rallies to Top End of Range Crude Oil (WTI) - $89.71 // $0.90 // 1.01% Commentary: Crude rallied to the upper end of its recent consolidation range as the January contract rolled off the board. Oil settled $0.79, or 0.9%, higher at $88.81. Prices got another $0.60 boost on the roll with WTI now trading just under $90. Will the $90 resistance break this time around? It’s impossible to be sure in the short-term, but over the medium-term, prices will likely be much higher. Volume should begin to really evaporate as we work our way through this week given the coming holidays. This week is shortened in observance of Christmas while next week is shortened in observance of New Years. Notable ...
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| Gold Seeker Closing Report: Gold and Silver Gain About 0.5% Posted: 20 Dec 2010 04:00 PM PST Gold climbed as much as $10.29 to as high as $1388.19 in Asia before it fell to see a $1.85 loss at $1376.05 by about 10:30AM EST in New York, but it then rallied back higher in the last few hours of trade and ended near its earlier high with a gain of 0.55%. Silver rose to $29.38 and fell to $28.76 before it also rallied back higher and ended with a gain of 0.48%.
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| Posted: 20 Dec 2010 03:36 PM PST "…Bank of Canada Governor Mark Carney tried to calm everyone's nerves by declaring that gold 'has no role to play in the international monetary system.'" Carney did not calm the nerves of Hans Merkelbach, investor, advisor, investor advocate, and watch dog of money manipulators, who wrote to the central banker from his office on Bowen Island, British Columbia. After quoting the above, Merkelbach rebuked Carney: "Let's get real! Would you explain to me why you, the ex-Goldman Sachs partner, besides having a warped idea of monetary matters, made such a ridiculous statement? The houses of cards are falling all around you, dear sir, but I guess it is hard to notice the bloody monetary mess from the ivory tower." Carney, no fool, but offensively patronizing, replied: "I said in a recent speech…that it is the adjustment mechanism rather than the choice of reserve asset that ultimately matters." And so he did; the link to his speech is here. Carney is correct. The adjustment mechanism is the topic, not a gold standard, per se. However, the speech makes clear the one adjustment mechanism he will not tolerate is gold. Carney never addressed the gold standard other to declare it is a "barbarous relic" (Keynes' hackneyed description). The central banker went on to say (in his speech) that instability has followed "the breakdown of Bretton Woods." This is a reference to the 1944 "gold-exchange standard" agreement in which gold was the adjustment mechanism. Under its provisions, foreign governments could convert (pay) $35 to the U.S. government in exchange for one ounce of gold. The United States defaulted on its Bretton Woods commitment in 1971. Afterwards (quoting Carney), "capital flows exploded, rising three times faster than the rate of growth of trade over the past three decades." That sentence is a tidy summation of why the world's financial system is destined to collapse. No longer constrained by the checks-and-balances of the gold-exchange standard, finance blossomed and grew so large that it is too-big-to-fail: until it collapses. There is no escape. No company has profited more from this bonanza than Carney's former employer, Goldman, Sachs & Co. There were approximately 1,000 employees at the investment bank in 1971. Today, there are 35,400. They are well paid. Carney acknowledged that the current "international monetary system is… increasingly unstable." In fact, there is no "system" to speak of other than a gaggle of central bankers, finance ministers and heads-of-state who are constantly issuing contradictory and deceitful statements. Carney's solution is to beef up the G-20. The latter is a splendidly incoherent group of 20 countries still rehashing the senile economics that inflated Goldman, Sachs. Carney rooted for the "successful completion of G-20 reforms." A more accurate prediction was made by Financial Times columnist Gideon Rachman, who, attending the first G-20 conference last year, wrote: "Watching an Indonesian delegate wandering, apparently carefree, through the conference centre in Pittsburgh, I felt a stab of pity. 'You don't know what you are getting into,' I thought. 'You are going to waste the rest of your life talking about fish quotas.'" Carney made no comment about the article Merkelbach attached to his letter, "Ben Bernanke: The Chauncey Gardner of Central Banking." The sentry on Bowen Island wrote a preface: "The following article displays the ignorance, stupidity and lies from your Professor partner in Washington." A gold bar is no more intelligent than Bernanke, but it tells no lies. It should be apparent by now that George Bernard Shaw was right: "You have a choice between the natural stability of gold and the honesty and intelligence of the members of government. And with all due respect to those gentlemen, I advise you, as long as the capitalist system lasts, vote for gold." 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.] A Vote for Gold 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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| Bert Dohlmen On Gold And Precious Metals Manipulation Posted: 20 Dec 2010 03:21 PM PST
Doug Kass appeared on CNBC today and attempted to present a bearish case on gold (along with his 3rd, or is that 33rd, case for a market top...) based on a verbatim recitation of half of Howard Marks' letter that we posted as a must read over the weekend. Naturally, had he recited the other half, he would have had to defend a diametrically opposing view, as that is the difference between great minds, who present both sides to the argument, and, well, everyone else. Nonetheless, we thank the bottom and top-ticker for offsetting some of the fervor his far more amusing boss at theStreet has imparted on gold, and which we find extremely worrying, as any time Cramer stands behind an asset, it is time to sell, no matter how much we like it. That said, and since we enjoy providing Doug and others with reading material for their "original" content for the next time they appear on CNBC, here is an excerpt from Bert Dohlmen's latest letter which explains not only why gold is an "investment for the ages" but also ties it in with the much discussed here topic of commodity manipulation: a far more important concept that we are surprised receives far less attention on such momentum chasing shows as Fast Money. From Bert Dohmen's Welllington Letter, December 18 edition: GOLD: THE INVESTMENT OF THE AGES All except new subscribers know: we are very bullish on gold for the next 5-10 years. We believe it is the one investment that will prevail during the unprecedented turmoil ahead. The governments around the world have only one response to the problems of failing banks, excessive governmental debt, potential sovereign debt defaults, and soaring unemployment: print more money! It’s called “monetizing the debt.” And people around the world have learned that to protect yourself against the governmentally induced destruction of the value of paper currency you buy gold and silver. We saw this during the turmoil in Ireland in recent weeks. As the dollar soared, gold and silver rose as well, which is contrary to past behavior when a strong dollar was bearish for the precious metals. That indicates that the precious metals are now a global hedge against depreciation of all currencies. As my friend Clyde H. always says, “All currencies are sinking, just at different rates.” The U.S. is on the same path as Greece, Ireland, Spain and Portugal. The extension of the U.S. debt ceiling this week turned out to be a virtual “Christmas tree” hung with all types of goodies, i.e. “pork,” for everyone who has paid into the coffers of the politicians. It’s $1.1 trillion of additional expenditures. Fortunately, it was defeated. This was on top of the tax compromise package the prior day that contained lots of tax benefits. Moody's warned that it could move a step closer to cutting the U.S. AAA rating if President Obama's tax and unemployment benefit package becomes law. China and other holders of U.S. debt are cognizant of the U.S. debt problem.. In China, they plan ahead, 10-30 years. They see the trends and prepare. China is now the largest gold producer in the world. Furthermore, China is the largest gold importer in the world. Once the large institutions worldwide start putting some gold assets into their portfolios, we will see a parabolic upmove in its price. And you want to be positioned for that. There are many ways, and many different ETFs. You must do some homework. We prefer ETFs that do not store physical gold in the U.S. We also like ETFs that invest in the mining stocks. Diversification among different ones is wise. And the day will come when you don’t want the gold ETFs traded on the U.S. exchanges. COMMODITIES: MANIPULATION? Copper is looked at closely by investors, even if they never speculate in the metal or in other commodities. It’s almost like a bellwether for commodities and “risk-taking.” There are several copper ETFs being formed now. That will create initial demand as they must buy copper to satisfy the initial investors. Could that be the top in copper prices and, therefore, in commodities? Many traders in these metals say that copper is highly manipulated, that there really is no shortage, and prices are kept artificially high. The same is said of oil. If that is correct, and we have a feeling that it is, then we have to look at the possibility of this game ending sometime in the future. What will end it? A realization that the China real estate bubble is starting to deflate. There are rumors that one trading outfit owns more than half of all the copper stored for the LME (London Metals Exchange). We have also heard rumors that silver is being manipulated and that someone is trying to corner the silver market. Remember, the Hunt brothers tried that in 1980. They went broke as a result when the exchanges changed the rules. Bart Chilton, a CFTC commissioner, said in October that he believed there had been “fraudulent efforts” to “deviously control” the silver price. No names were mentioned. Recently, he said that “earlier this year, one trader held more than 40 per cent of the silver market.” The Financial Times reports that the CFTC’s Bank Participation Report indicates that “one or more US banks” held a gross short silver futures position equal to 19.1% of the total number of outstanding contracts in early December (2009) and 32.2% in January (2010). But that report is only for the U.S. exchanges. It is known that JP Morgan had a very large short position on New York’s Comex exchange, a division of Nymex. Supposedly, these were hedges for the bank’s long positions in physical silver and London’s over-the-counter market. On December 16, 2010, the CFTC issued proposed position limits for commodity contracts. This has been expected for a long time; nevertheless, it caused a plunge in a number of hot commodities, including gold. The fear is that this will cause the big futures operations to dump large positions. In realty, we believe that there will be many ways to circumvent the regulations by those who want to manipulate the markets. Also on the regulatory front is a report regarding what effect the new Basel II banking regulations would have had if they had been implemented immediately, instead of with the delay of 5 years and more. The report said that financial institutions would have to raise $797 billion of capital. Furthermore, lenders would have to raise a huge 2.89 TRILLION as protection against a run on deposits. This gives you an idea of the massive amount of capital banks will have to raise over the next years. We will need a spirited economic recovery to make that possible. This problem will not go away. Those interested in the full Wellington Letter, can find the subscription terms here.
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| Is JP Morgan Shifting Its Silver And Gold Shorts To Non-US Domiciled, And Thus Unregulatable, Banks? Posted: 20 Dec 2010 02:07 PM PST
Going through recent bullion bank shorting information, Adrian Douglas has stumbled across a nugget that may explain the sudden willingness of JPM to admit to the FT, via proxies as obviously the bank would never expose itself to even remote market manipulation claims, that it has collapsed its silver short. The reason: even as US bank silver (and gold) shorts by US banks have been gradually declining, those positions established by non-US bank, and thus entities not under the CFTC's control, have seen their silver shorts surge, increasing by orders of magnitude over the past several months. Is there a stealthy transfer of precious metals market manipulation taking place, one that exonerates the domestic, and therefore regulatable, suspects, while making foreign banks carry the burden of suppressing silver and gold prices? The reason: hand over the silver shorts to entities that would not be subject to the CFTC's upcoming size limit rules. Per Douglas: "The sudden and massive increase in their short positions in both metals is conspicuous when compared with historical trading patterns. The fact that it occurs at a time when the US banks that are mega-short appear to be covering makes it doubly intriguing. It looks like a strategy to shift suppression and manipulation of the market to banks that are not under the direct supervision of the CFTC. Will these non-US banks be expecting to receive an exemption to position limits where US banks might not be successful?" We hope to get an answer to all these questions soon - Douglas has sent out the following letter to the only honest man at the CFTC, Bart Chilton, which explains Douglas' findings, and demands an inquiry into just who these foreign banks are that are suddenly shorting silver and gold on the margin at alarming rates. Letter To CFTC Commissioner Chilton On Trends In Bullion Bank Gold and Silver Short Positions TO: Bart Chilton, Commissioner of the CFTC
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| Silver: Steady as she goes . . . Posted: 20 Dec 2010 11:29 AM PST By Paul Ferguson Going with the sailing analogy here. Silver has set a course to the northeast. When we look at it on a monthly chart—a timeframe that filters out short-term noise—we can see Silver moving along this course, tacking regularly but moving inexorably northeast. In 2008, buffeted by the global financial storms, the good ship Silver got blown [...]
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| Posted: 20 Dec 2010 10:21 AM PST Safe-haven demand lifts gold again The COMEX February gold futures contract closed up $6.90 Monday at $1386.10, trading between $1376.60 and $1388.90 December 20, p.m. excerpts: see full news, 24-hr newswire…
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| Graham Summers’ Free Weekly Market Forecast (Fed vs Euro Edition) Posted: 20 Dec 2010 10:12 AM PST
This week’s action can be summated in a single question:
Which is stronger, the Euro collapse or the Fed’s Permanent Open Market Operations (POMOs) AKA money pumps to Wall Street?
These are the two primary forces at work on the markets today. Thus, this week’s action will be determined by one of the two:
1) The Euro (the bearish influence) 2) Light volume/ the Fed’s ongoing POMOs (the bullish influence)
Regarding #1, the European currency has just taken out Support at 132. It’s now closing in on its rising trendline of the last six months. As I write, this line is crossing 130, which also coincides with the low for the first leg down in this recent collapse:
As you can see, a break here would herald a SERIOUS decline as the Euro will have taken out its trendline AND its recent low. This would set the stage for a drop to 126 or so.
IF this happens this week, the US Dollar will rally strongly (the Euro accounts for over 50% of the US Dollar index). This in turn will take down commodities (including Gold) as well as stocks.
This is the bearish case for this week. We get additional support for this outcome from several market leaders, which all look to be topping or to have already topped. They are…
Emerging markets:
Gold:
The Baltic Dry Index:
While these leading indicators suggest stocks are due for a serious correction of sorts, one has to admit that thus far stocks have held up surprisingly well despite the Euro’s first leg down.
This is largely due to the second factor outlined above: the Fed’s ongoing POMO efforts combined with the light volume, the latter of which will be a key issue this week.
On that note, this week we have two POMOs today, two again tomorrow, and one on Wednesday this week. The total Fed money pump will be in the ballpark of $25-30 billion.
Given that market volume will be extremely low due to most of Wall Street being on holiday this week, we DO have the potential for a serious ramp here.
Again, it all boils down to the following question:
Which is stronger, the Euro collapse or the Fed’s Permanent Open Market Operations (POMOs) AKA money pumps to Wall Street?
Any time before last week, and the answer would have been the Fed’s POMOs. However, we DID have FOUR POMOs last week and stocks barely managed to close in the black:
So at this point it’s a bit of a toss up. In general it’s best not to make a bold move this week given the light volume. But if the Euro starts collapsing in a meaningful way… LOOK OUT BELOW!
Good Investing!
Graham Summers
PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.
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| How Bears Are Moving in on Gold Posted: 20 Dec 2010 09:24 AM PST optionMONSTER submits: By Chris McKhann Shares of gold have lost just a bit of their luster even as the equity markets have pushed to new highs, and this morning's option trading suggests that there is more downside ahead for the precious metal. Complete Story »
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| Cutting Out the BS of Crisis-Era Bailout Activities Posted: 20 Dec 2010 09:00 AM PST Deception, like a mushroom, flourishes in darkness and manure. And the only way to end a deception is to drag it out into the light…and cut out the BS. Two weeks ago, for the first time ever, the Federal Reserve dragged its crisis-era bailout activities out into the light of day (thank you Senator Bernie Sanders and Congressman Ron Paul!). The resulting revelations exposed a number of shocking truths, like the truth that the big Wall Street banks did not merely receive one $10 billion loan each from the TARP facility; they also received tens of billions of undisclosed loans from other lending facilities. On top of that, many of the big banks raised hundreds of billions dollars by secretly selling mortgage-backed securities directly to the Fed. These massive undisclosed bailouts contributed greatly to the relatively robust earnings results many big banks produced during 2009 and early 2010 – results that would have been impossible without the hidden assistance. Accordingly, stock market participants came to believe the fiction that the big banks were "healthy," rather than the truth that they were massively subsidized. As opinions changed, so did share prices, corporate bond prices, credit default swap prices, etc. Some investors made money from the resulting asset-repricing, some lost money. Neither side reaped the reward it deserved, but only the result that the Fed's manipulations produced. In an honest and transparent marketplace, the list of winning and losing investors would have been very different than the actual list that emerged from the crisis. In a truly free market, the financial markets, themselves, pick the investors who win or lose, not the Chairman of the Federal Reserve or the Secretary of the Treasury. Deceptions flourished during 2009, primarily because the Fed was secretly pumping trillions of dollars into various private companies without ever disclosing the recipients, timing or sums involved. The outside world was left to guess. By so doing, the Fed dramatically "un-leveled" the playing field of American capitalism. Many undeserving companies benefited from preferential treatment during the crisis, while many deserving investors, savers and taxpayers directly or indirectly subsidized this preferential treatment. That's not free-market capitalism, dear investor. That's cheating. Eric Fry Cutting Out the BS of Crisis-Era Bailout Activities 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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| Gold Stocks Upside Greater than Gold Bullion Price Posted: 20 Dec 2010 08:38 AM PST Frequently prospecting for new mining companies in natural resource-rich nations, Rodman & Renshaw Senior Analyst Alka Singh is just back from Argentina. The Gold Report caught up with her to sift through her thoughts on the precious metals industry. Her current objective is to seek out gold and silver producers with growth potential beyond the price appreciation of commodity metals. The Gold Report: You follow both precious and base metals for Rodman & Renshaw. From the lay investor's perspective, what's the difference? What are the value drivers in precious versus base metals that investors should know?
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| USAGOLD News, Commentary and Analysis Posted: 20 Dec 2010 08:33 AM PST
Clients & Friends, How is the Federal Reserve's policy of Quantitative Easing affecting our economy and fueling the continued rise of gold? Take advantage of our FREE Introductory Information Packet, and while you're there, consider signing up to ensure that you don't miss out on a single issue! Happy holidays everyone and best wishes for a prosperous 2011. From all of us at USAGOLD, Centennial Precious Metals, Inc. Good cheer to all. . . .
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| Fed Shortsighted QE Policy Fuels the Continuing Gold Price Rise Posted: 20 Dec 2010 08:22 AM PST “Washington doesn't agree on much these days, with one glaring exception: that the U.S. is facing a long-term fiscal crisis. The federal government's debt is now $13.8 trillion and is projected to hit $20 trillion by the end of the coming decade-when it will be the highest level as a share of the economy that the U.S. has seen in 50 years. In September the International Monetary Fund warned that the U.S. is moving dangerously close to a point at which spooked markets will send interest rates on new borrowing to devastatingly high levels. As it is, the government is on course to spend $1 trillion per year on interest costs alone-about a quarter of all federal spending. ‘We are accumulating debt burdens that will rival a third-world nation within 10 years,’ says David Walker, former chairman of the nonpartisan Congressional Budget Office. ‘Once you end up losing the confidence of the markets, things happen very suddenly-and very dramatically. We've seen that in Greece, we've seen it in Ireland, and we must not see it happen in the United States.’" - Michael Crowley, The New York Times
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| Shortsighted Fed Policy Fuels the Continued Rise in Gold Posted: 20 Dec 2010 08:21 AM PST by Jonathan Kosares[INDENT] “Washington doesn't agree on much these days, with one glaring exception: that the U.S. is facing a long-term fiscal crisis. The federal government's debt is now $13.8 trillion and is projected to hit $20 trillion by the end of the coming decade-when it will be the highest level as a share of the economy that the U.S. has seen in 50 years. In September the International Monetary Fund warned that the U.S. is moving dangerously close to a point at which spooked markets will send interest rates on new borrowing to devastatingly high levels. As it is, the government is on course to spend $1 trillion per year on interest costs alone-about a quarter of all federal spending. ‘We are accumulating debt burdens that will rival a third-world nation within 10 years,’ says David Walker, former chairman of the nonpartisan Congressional Budget Office. ‘Once you end up losing the confidence of the markets, things happen very su...
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| Gold Daily and Silver Weekly Charts - Bloomberg Apparently Does Not Like Gold Posted: 20 Dec 2010 08:15 AM PST | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contrarian Indicator: When Gold ATMs Go Global Posted: 20 Dec 2010 07:56 AM PST  Prieur du Plessis submits: Imagine being able to buy some gold just about anywhere. Now a mall in upmarket Boca Raton, Florida, is the first in the U.S. to have a gold dispensing machine. I suspect by the time these machines are all over the world, this may very well serve as a contrarian indicator for gold bullion. Complete Story »
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| Posted: 20 Dec 2010 07:55 AM PST courtesy of DailyFX.com December 20, 2010 07:47 AM Daily Bars Prepared by Jamie Saettele There are signs that this gold reversal is ‘for real’. For one, each successive peak since October sports divergence with RSI. The latest top was also accompanied by several bearish candle patterns (doji and bearish engulfing). After several false starts, gold is again below its 20 day average and focus is now on the multi month low of 1317.10....
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| Six Reasons Why Claude Resources Is a Buy Posted: 20 Dec 2010 07:54 AM PST Money Morning submits: By Jack Barnes When I was doing due diligence for my investors, I remember the CEO of an oil and gas company once telling me: "If you want to find oil, it's easier if you drill where oil has already been found." This rule carries with it a lot of truth about geology. However, it works with gold resources just as much as it does with oil. It's always easier to find gold, where it has already been discovered. In Canada, the most prolific gold mining district is the Red Lake District. If you want to find gold, it helps to have ownership in a Red Lake property. It is the heart of high volume gold production in Canada. And Claude Resources Inc. (CGR) is one of the few companies to own one of the historic mines in that district. The Madsen mine is still fully permitted with a mill ready to operate again. The historic Madsen mine was in production from 1938 until 1976. It produced over 2.4 million ounces of gold during that time period. The mine production exceeded 100,000 ounces per year and averaged 0.29oz per ton during its history. Claude Resources owns 100% of the 10,000-acre location, with its working 4,000ft -plus historic mine shaft, and permitted mill and tailings system. The company will be able to put the property back into operation once its fully dewatered, rehabilitated and new high-grade reserves have been mapped out. Remember, back in 1989 another Canadian mining company, Goldcorp Inc. (GG) purchased the Arthur mine in the Red Lake district. The company reevaluated the geology over the following years, drilled a series of new exploration holes in 1995, and subsequently made one of the largest gold discoveries in history. Red Lake Mine in 2009 produced over 600,000 ounces of gold for an average cost of $288 an ounce, making it one of the richest and cheapest sources of gold on the planet. The Madsen mine is about six miles from the Goldcorp Red Lake mining operations. Claude Resources has spent the last couple of years dewatering the mine so that new modern drilling rigs can be installed into historic operating levels to increase the known resource base. The new drilling will allow the company to look for the same types of zones that Goldcorp found in the Red Lake mine complex next door at lower depths than where Madsen was last mined. Of course, the Madsen mine is not the end all or be all of Claude Resources. For the last 18 years or so, Claude has been mining and producing from the 100% company owned Seabee mine in Saskatchewan, Canada. The Seabee mine has produced over 900,000 ounces since it was brought into commercial production in December 1991. Claude has found satellite deposits in the Seabee area, allowing the company to increase tonnage by adding in volume from the Santoy 8 mine, which it brought into operation in the last few years. There are additional areas, along with some very interesting high-grade strikes in deep Seabee, which makes this mining location a long-term asset for the stakeholders of Claude Resources. Seabee operations have produced an average of 45,000 ounces of gold per year, for the last five years. The Seabee operations were the deepest in North America a few years ago, when I was last in touch with Claude Resources Chief Executive Officer A. Neil McMillan. The property has two mines in commercial operation now, with additional exploration and potential production upside in the area to be developed later. The Seabee mine has averaged around $700 per oz for the last three years. This should help the company benefit significantly from rising gold prices. Finally, Claude has been focusing on getting a controlling interest in the Amisk project in Saskatchewan. This project represents a "blue-sky" opportunity for shareholders. Today, Claude owns a 65% ownership stake in the project and expects to continue its 15-year exploration of the property. Claude Resources has sold off its historic oil and gas operations, allowing the company to focus on its gold production assets. This has made the company a pure play gold production company with 100% of its assets in Canada. The management has shown the ability to operate with very low gold prices, and now it will be able to expand the company's assets with a renewed focus on gold operations. So, let's do a quick review of why Claude Resources is a "Buy" in today's market:
Claude Resources is a small-cap company, with plans to grow to mid-cap status, while owning big-cap assets. I have always liked companies that are growing their assets, investing in future growth, and in control of their own destiny. Claude Resources has all of those features. Complete Story »
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| Nic Lenoir's Outlook For The Week Ahead Posted: 20 Dec 2010 07:50 AM PST
From Nic Lenoir of ICAP Data this week is relatively light given and it's a holiday week. 3rd Quarter GDP at this point has no informative value regarding current and future economic activity. The slew of housing data is also inconsequential. Everyone knows housing is in a double dip so any slight improvement will be used by pundits to talk up the economy but fundamentals remain in the dumpster. Continuing claims is probably the most important piece of data this week given that durable goods is such a volatile series.
The Chart looks pretty constructive here for the USD index. There is an outside chance we could retest the 55 or 60 dma which has been a good envelop of the price action lately, but I feel that the dip on 12/14 marked the low on the pullback before further upside and a move through the 200-dma.
Fixed Income has given headaches to everybody recently, but the 5Y future weekly chart here is very interesting and if this week we close above 118-10 it will confirm a major turn. Interestingly I find that even if we are still in a bearish trend the market needs to pullback at least to 118-08. Therefore playing upside here makes sense knowing that it might only be a weekly play if the market fails to confirm the major reversal. For that reason if expressed via options the structure should have enough delta to at least capitalize on the bounce and cover 1 week worth of theta. The February 118.5/120 call spreads should work well in my opinion. If bought outright ideally 117-06/117-08 is the ideal entry.
As far as equities are concerned I am still very convinced we are nearing a top that will prove the high for at least a year. The resistance line and ideal sell level is considerably higher around 1,285/1,290 but it is very common to top out without testing trend resistance, especially with indicators showing the market is as over-stretched as it has been on the upside since the Nasdaq bubble top. The Nikkei has a very interesting profile technically here with massive daily divergence and failure so far to retrace beyond the 61.8% since April highs which is around 10,410. The market should pull-back towards 9,917 at the minimum. In the US the 5-day open Vs. 5-day close moving average has been a very reliable trend indicator so given the fact we are making new highs it might be more prudent to wait for a turn in the trend to sell outright.
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| Interview: Precious Metals Expert Alka Singh Talks Gold, Silver Posted: 20 Dec 2010 07:42 AM PST The Gold Report submits: Frequently prospecting for new mining companies in natural resource-rich nations, Rodman & Renshaw Senior Analyst Alka Singh is just back from Argentina. The Gold Report caught up with her to sift through her thoughts on the precious metals industry. Her current objective is to seek out gold and silver producers with growth potential beyond the price appreciation of commodity metals. Complete Story »
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| Why Gold is About To Power Higher to Complete a Big Rally Posted: 20 Dec 2010 06:52 AM PST The gold bull has been moving in very reliable Elliott Wave and Fibonacci patterns for many years now, but once in awhile the waters get a little murky for sure. Recently we have seen a fair amount of volatility near year end as position ... Read More...
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| Unmasking The Unintended Consequences Of US Central Planning Posted: 20 Dec 2010 06:50 AM PST
The NIA continues with its series of bite-sized video documentaries exposing the stupidity and lies out of the US government. While the previous clip looked at a fictitious world in which the dollar had just died, today's is one which analyzes the plethora of unintended consequences that emerge as a result of the government's centrally planned tinkering. As always, it is a must watch, even if one does not agree with the NIA's overarching theme that government policies will ultimately result in uncontrollable price moves following the destruction of the reserve currency. Among the 'myths' debunked are:
And much more lunacy that would make Stalin proud. Worth the 10 minutes.
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| Merry Monday – Will Santa Deliver Dow 11,500? Posted: 20 Dec 2010 06:13 AM PST
Merry Monday – Will Santa Deliver Dow 11,500?
Everyone else seems to have forgotten, including the Europeans. The Stoxx EU 600 Index hit its highest point since September 2008 this morning as commodities continued to climb (another chance to short oil futures below the $89 line). The Stoxx 600 is up 6.5% for the month and up 9.9% for the year. We had talked about gold, oil and the S&P in my Weekend Post; all are up about 10% in the second half of the year as the dollar fell 3.5%. This morning, the dollar is hugging that 80.75 line, still 10% off it's June high. If Europe really is "fixed" then the dollar is free to drop back to it's lows, which could provide tremendous rally fuel for stocks and commodities. Moody's warned it may lower Spain's rating, citing "substantial funding requirements" and France is on Credit Watch and Belgium faces a rate cut at Moody's as well while Standard and Poor's is reviewing its assessments of Ireland, Portugal and Greece. The credit default swaps tied to the French bonds imply a rating of Baa1, seven steps below its actual top ranking of Aaa at Moody’s but, if it doesn't bother the Europeans - why should it bother us? There is no (ZERO) logic to global markets racing back to all-time highs with the VIX running back to it's lows as if there is not a care in the World and I don't say that because I'm a bitter short - we had 16 bullish trade ideas last week and just 8 bearish ones as we simply threw up our hands and played the technicals in Member Chat as the Dow tested that magical 11,500 line. Europe reads the same news we do and markets over there are up 1% this morning despite a pretty poor performance turned in by China, where the Shanghai fell 1.4% (and that was AFTER a 50% recovery into the close) and the Hang Seng fell 0.3% (also big recovery into the close) and the Nikkei fell 0.85% (small afternoon recovery) and the BSE, our global leader into November, weakly flat-lined 5% off its highs. We're watching 11,500 on the Dow as well as the 1,225 line on the S&P, which is its "must hold" line that we've been tracking on the breakout. Will the Dow break higher or the S&P break lower? That's our directional question for this thinly-traded week. The easier path is for the Dow to move higher - as you can see from the chart, the markets generally rise on lower volume weeks and we're pretty much guaranteed two in a row to close out the year with Christmas Eve this Friday and New Year's Eve next Friday:
This is the same channel we've been tracking all year with our most recent chart update on May 5th (you don't have to update very often when you get the channel right!) so none of this is any surprise EXCEPT the breakout, which we did not expect to happen without a proper pullback. You can blame inflation or POMO or tax cuts or commodity speculation for throwing off our forecast but that doesn't matter - we have to be ready to go with the flow, even if we don't agree with the direction of the flow at the moment. That's why we began last week with "5 Trades to Make 5,000% on a Breakout" last Weekend and those were April plays that are still available as all we've done is flat-line since then.
The Fed is doing its best to stoke those inflationary fires this week with 2 rounds of POMO this morning totaling $17Bn - a new one day record! Tomorrow is a mere $11Bn in two rounds and I don't even know why they bother opening the window on Thursday with just $2.5Bn but still, it's a nice $30.5Bn week at the Fed's printing press and THAT is how we can ignore Europe, Asia and anything else that smacks of reality in this World. The scary chart on the left is from a good article last year that explains how the Fed, levering up $2.2Tn it effectively steals from the taxpayers (by debasing the currency) then funnels it up to those of us who trade derivatives and turn it into real money. Well, real in that as long as we cash it out before the whole thing collapses we're in good (relatively) shape. Already this year, the Fed has added enough to get that balance close to $3Tn and they plan to push $3.7Tn (another 20%) which should run the OTC Derivatives on top of the pyramid (that's us) up over one Quadrillion Dollars! Muhahaha! We're getting ours and we hope you get yours too... This is what happened in America and other parts of the World in the 1920s as inflation, brought on by WWI and market speculation which crashed the markets (like 2008), followed by a depression (like the last two years) which was followed by World Governments using currency devaluations to increase the competitiveness of a country's export products to reduce balance of payments deficits (like now). This worsened other nations' deflationary spirals, which resulted in plummeting national incomes, shrinking demand, mass unemployment, and an overall decline in world trade (see the Baltic Dry Index). Although this strategy tended to increase government revenues in the short run, it dramatically worsened the situation in the medium and longer run. Don't worry though, we were saved by a massive World War in which about 60M people died, which was like 150M people being killed today as the population was only 2.5Bn at the time - my how we've grown! Would killing off 150M people reduce our global unemployment picture - you bet it would! More or less, that's the plan The Bernank has in store for us as it's going to take either war or starvation to cull the herd as we sure aren't doing anything to create actual jobs, are we?
So we will embrace the rally if it comes and we shall welcome it with open arms. We are still short-term bearish as our short plays have higher deltas than our hedged longs but that will change once we top 11,500 and hold it for a day or two. We had hoped for a nice market correction to do some bargain hunting but, then again, they are ALL bargains if oil is going to $100 and gold is going to 2,000 and copper to $5 and none of that will bother the consumers (according to analysts who much be much smarter than me because I don't get it) and that will rocket retail and consumer stocks as the unemployed masses run out and buy IPads and electric cars and rent movies on NetFlix and, of course, get take-out from Chipolte! The German Ifo index fell in December, the seventh consecutive month that index has fallen and Europe being buried in snow can't be helping either. Another thing the markets don't seem worried about is the debt spreads between EU high-grade corporate bonds and US bonds are narrowing (US was lower) as investors are downgrading the outlook for European companies dependent on government spending as budget cuts and job losses. Well, thank goodness none of that stuff is happening here! Sorry for the sarcasm but this is just ridiculous, isn't it:? Oh well, we'll just sit back and see how this all plays out. In addition to record amounts of money coming in from the Fed, Goldman Sachs (which has already told us to buy on POMO days and EVERY day is a POMO day now) has upgraded its outlook on Japan (up 20% in just 6 months!) and it is joined by MS and CS, which also predict the best year for Japan since 2005. Not wanting to be outdone by their fellow Gang of 12 Members in making ridiculous statements to goose the markets on a Monday (since there is no M&A), Deutsche Bank drove its 2011 S&P prediction all the way to 1,550 - the very top of our chart! That's up 25% for the year and that means we can buy the SPY 2012 $145 calls for $2 and sell the 2012 $85 puts for $1.95 and that's net 0.05 for a contract that pays $10 if we hit DB's S&P 1,550 target. That's a nice 20,000% gain for the year - who says it's hard to make money in this market?
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| Year-End Precious Metal Insurance Sale Posted: 20 Dec 2010 06:10 AM PST Hard Assets Investor submits: By Brad Zigler Holiday bargains abound now. Relatively speaking, of course. Take the price of gold and silver as examples. Price-conscious bullion buyers who waited a week for a sale ("Five Golden Rings A Bargain?") were recently able to save $20/ounce for the shiny yellow stuff. Complete Story »
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| The Half-Truth and Nothing But the Half-Truth Posted: 20 Dec 2010 06:00 AM PST Transparency is essential in a free market. It enables market participants to make informed investment decisions. Unfortunately, in America's "free market" economy, transparency is a latchkey child. It only sees the light of day when someone breaks down the door and carries it outside. Institutions like the Federal Reserve and the Treasury explicitly and vehemently resist transparency. It is the enemy, they say, of an "independent" monetary policy. During the crisis of 2008-9, the Federal Reserve and Treasury operated as covertly as the CIA – doling out trillions of dollars in bailouts and guarantees to a handful of coddled corporations. Those financial "black ops" produced myriad deceptions in the financial markets. In addition to the Fed's intended deception that insolvent financial firms are as fit as a fiddle, the Fed's meddling also produced numerous knock-on deceptions like: the labor market is recovering, the housing market is bottoming out, the financial sector is reviving and Goldman Sachs never makes a trading loss. The Fed's secret meddling also produced a few very subtle deceptions – the kind that seem victimless…until you dig a little deeper. During the crisis of 2008-9, for example, Ford Motor Company borrowed as much as $7 billion from a lending facility of the Federal Reserve. But the details of these borrowings did not come to light until just three weeks ago. And even now, very few investors – or car-buyers – seem to realize that GM and Chrysler were not the only "Big 3" car companies to receive a helping hand from the government. Ford also cashed a few government checks. On December 3, 2008, Ford Motor Co.'s CEO, Alan Mulally, applauded the assistance the federal government extended to General Motors and Chrysler, while also declaring, "Ford is in a different position. We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government." Two years after this pronouncement, Ford remains "the auto company that did not receive a government bailout." So pervasive is this legend, that tourists in Dearborn, Michigan can be seen wearing T-shirts like these:
Ford relishes this public perception and uses it to its economic advantage. Kudos to Ford. Now let's look at the facts. Just one month before Mulally declared, "We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford Motor Credit had borrowed nearly $4 billion from the Fed's Commercial Paper Funding Facility (CPFF). And just two weeks after this remark, Ford Motor Credit borrowed an additional $3 billion from the CPFF. In all, Ford borrowed $7 billion between October 27, 2008 and June 17, 2009. Furthermore, shortly after Mulally claimed to be in a "different position" from that of GM and Chrysler, Ford's borrowings from the CPFF placed Ford in a nearly identical position.
The Ford borrowing timeline looks like this: 10-27-08 – Ford Motor Credit borrows $1.980 billion from the CPFF Mulally deserves no blame for availing himself of funding that was freely – if very privately – provided by the Federal Reserve. After all, Mulally's Wall Street counterparts were already busy tapping various credit facilities at the Fed. So can we blame Mulally for thinking to himself, "Hey, I'd like to tap that too!"? Nor does Mulally deserve blame for failing to disclose the assistance. On the 18th page of the business plan Ford submitted to the Senate Banking Committee on December 2, 2008, the document states: "At Ford Credit, and in light of the frozen capital markets, we…are eligible for and are participating in funding programs from the European Central Bank and, more recently, the Federal Reserves Commercial Paper Funding Facility (CPFF)." However, on the second page of that very same document, Ford states that it is "in a different situation from our competitors, in that we believe our company has the necessary liquidity to whether this current economic downturn – assuming that it is of limited duration." The "different situation" disclosure is the one that Mulally nurtured in his public remarks and the one that the public embraced. Mulally wasn't lying; he was posturing. And posturing, as a tactical maneuver, can be brilliant. Certainly, Mulally's posturing served Ford very well during the crisis…and continues to serve it well today. Therefore, Ford shareholders have every right to be pleased with Mulally's public remarks; the champions of free markets and transparency, less so. The point of our tale is not to cast stones at Mulally, but rather to catapult boulders at the Federal Reserve, and by extension at the exalted notion that institutionalized secrecy is an essential component of "guiding" a free market economy… In fact, if we had enough boulders, we would also catapult them at the idea that the economy requires any guidance at all from the Federal Reserve. Thanks to the Fed's secret dealings, companies like Ford could obtain the government's assistance, while appearing to operate without it. That was a very convenient circumstance in the depths of the crisis…both for the bailout recipients and for the officers of bailout recipients. "Bailout" was a very bad word in 2008. And any CEO who asked for a bailout was an unpopular guy, especially if he asked for a bailout and continued to draw a multi-million-dollar salary. Consequently, numerous CEOs offered to "work for a dollar" in order to keep the barbarians at the gate. Very few CEOs wanted to appear to be profiting at the taxpayers expense, although they clearly had no qualms about not appearing to benefit at the taxpayers expense, especially if they could actually benefit without the appearance of it. Mulally found that path. Offer to work for one dollar if Ford ever tapped a $9 billion credit line, but continue to draw a multi-million paycheck while quietly borrowing $7 billion from the Fed. But there's another reason why Mulally might have accentuated the positives about Ford's financial position, while whispering the negatives: it was a good business decision for Ford…if not a great business decision. During the crisis, Ford grabbed market share from its Big 3 rivals. Part of the reason was – and continues to be – the perception that Ford received no help from the government. According to a survey of 1,000 adults, conducted about two months ago by the Rasmussen Reports, "Twenty-seven percent say they or someone they know has avoided buying a GM car because of the bailout and government takeover." "Ford did not seek a government bailout," the Rasmussen Reports states flatly, "and 55% of Americans say they are more likely to buy a Ford car for that reason… In fact, 18% say they or someone they know has bought a Ford car just because the company did not take any bailout funding." Not surprisingly, as the nearby chart illustrates, Ford's market share began increasing very significantly in late 2008…and it continues to increase to this day.
Buying a good car for the wrong reason is not the worst thing someone could do. But why not let the free market and/or Consumer Reports decide which automaker deserves to sell a car? Why should the Federal Reserve play any role whatsoever in this equation? To reiterate, we don't blame Mulally or Ford for taking advantage of an advantageous situation. We blame the Federal Reserve (and the Treasury) for nourishing an environment of preferential treatment, non-disclosure, backroom deal-making and every other form of capricious market manipulation. Our conclusion: Abolish the Fed and let the free markets decide who wins and loses. Regards, Eric Fry The Half-Truth and Nothing But the Half-Truth 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: 20 Dec 2010 05:59 AM PST Share this:
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| Guest Post: The Bennie Who Stole Christmas Posted: 20 Dec 2010 05:57 AM PST
Submitted by Jim Quinn of The Burning Platform The Bennie Who Stole Christmas Ben Bernanke is a highly educated PhD from Princeton who has never worked a day in the real world since he graduated from college in 1975. His entire life has been spent in the ivory tower of academia surrounded by models and theories that work perfectly in the comfort of his office. After building his reputation as an “expert” on the Great Depression by studying it and reaching the wrong conclusions, he came down from his ivory tower in 2002 to join an organization that has systematically destroyed the value of the US currency, thereby undermining the well being of the once vibrant middle class. He became a member of the Federal Reserve and has served his masters (Wall Street Banks, Mega-corporations, Washington politicians) unswervingly since. When he makes his now regular appearances on 60 Minutes, he tries to give the appearance of being someone concerned about the average American. The facts in the real world completely obliterate the lies he nervously mouths while answering softball questions underhanded to him by corporate media mouthpieces. His quivering lip and nervous ticks reveal his true nature. How could Bernanke blatantly take measures that destroy the lives of millions of Americans? Maybe Dr. Seuss had the answer:
It could be his head wasn’t screwed on just right. If the Grinch had been pimping for a small pack of Grinchsters who impoverished the honest people of Whoville, then the Dr. Seuss poem would have perfectly described Ben Bernanke, the Federal Reserve and the banksters that run the show here in the USA. The actions taken by Ben Bernanke, Alan Greenspan and their brethren on the Federal Reserve over the last quarter century have destroyed the middle class and left senior citizens impoverished, while enriching its Wall Street masters. Now he is stealing Christmas from the hard working middle class of this country. Bernanke’s latest theoretical venture into manipulating the puppet strings of the economy began with his speech at Jackson Hole in August and concluded with his Op-Ed on November 4. His master plan to buy an additional $600 billion of Long-term Treasuries is being implemented on a daily basis. This QE2 follows his previous QE1, which consisted of buying $1.4 trillion of toxic mortgage securities from his masters, the insolvent Wall Street banks. What follows are Ben Bernanke’s own words: “I believe that additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions.” – Ben Bernanke – August 27, 2010 - Jackson Hole “Given the Committee’s objectives, there would appear–all else being equal–to be a case for further action. For example, a means of providing additional monetary stimulus, if warranted, would be to expand the Federal Reserve’s holdings of longer-term securities. Empirical evidence suggests that our previous program of securities purchases was successful in bringing down longer-term interest rates and thereby supporting the economic recovery.” – Ben Bernake – October 15, 2010 – Boston Speech “To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.” – Ben Bernanke Fed Announcement – November 3, 2010 “This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.” – Ben Bernanke – November 4, 2010 – Washington Post Op-Ed Ben and his friends on the Federal Reserve have a PR machine to help sell their lies. Let’s assess whether Ben and his Federal Reserve have helped or hurt the average American. Throwing Senior Citizens Under the BusThen he slunk to the ice box. He took the Whos’ feast, he took the who pudding, he took the roast beast. He cleaned out that ice box as quick as a flash. Why, the Grinch even took their last can of Who hash. - Dr Seuss
There are approximately 40 million senior citizens living in 25 million households in the US. According to the Census Bureau, more than 12 million of these households survive on less than $30,000 of income per year. The median household income in the US is $49,777. A full 70% of all over 65 households make less than the median income. A recent study found that 58% of those between 60 and 84 will at some point fail to have enough liquid assets to allow them to get through unanticipated expenses or declining income. The vast majority of their income is from Social Security payments. Most senior citizens are rightly risk adverse and dependent upon income from certificates of deposit. During the 1990&rime;s and as recently as 2007, a senior citizen could get a 5% return on a CD. Many of these people depended on this interest income to pay their everyday expenses. Below is a chart that plots the average interest rate for 6 month CDs since 1964. Today the average rate on a 6 month CD is .30%. Ben Bernanke is to thank for this poverty enhancing rate. He reduced the discount rate to 0% while paying interest on deposits at the Fed. The affect of this policy has been to transfer hundreds of billions to the Wall Street criminal banks from the pockets of senior citizens and other Americans dependent upon interest income to sustain their meager lives. A brainless CNBC anchor can look at this chart and realize that the Federal Reserve caused the housing crisis by driving down rates from 2002 through 2005. Ben Bernanke, who never saw the housing collapse coming and personally had an exploding adjustable rate mortgage, has learned nothing from the prior disaster. He has driven rates down to 0% in order to force people into speculative investments. The Federal Reserve is a perennial bubble blower. This will likely be the final bubble of Bennie’s career. These recent actions by the Federal Reserve are just the tip of the iceberg. Alan Greenspan, the Federal Reserve and the US Government have systematically screwed senior citizens for decades by purposely understating CPI. The result has been that the cost of living adjustments to Social Security has seriously lagged real inflation. For the 2nd consecutive year senior citizens will get no cost of living increase on their Social Security. The average monthly Social Security payment is $1,074. While seniors struggle to make ends meet, Wall Street banks are handed billions in free money by Ben Bernanke. The chart below details the COLA increases since 1975. Alan Greenspan and his commission began manipulating the CPI in the early 1980s.
Since 2000, seniors have seen their monthly payment increase by 27%, or less than 2.5% per year. I challenge anyone to convince me that inflation has been 0% for the last two years. I have calculated my real inflation and it is four times the government reported figure. I suppose government bureaucrats and Federal Reserve Chairmen don’t fill up their gas tanks or go food shopping. John Williams at www.Shadowstats.com calculates the CPI as it was calculated prior to the Greenspan fraud. Based on this true assessment of inflation, prices have increased by 100% since 2000, or 8% per year.
Only an Ivy League academic could examine the following yearly price data and conclude, as Bernanke has, that inflation is well contained:
I wonder what a can of Who Hash will cost in 2011? The truth is that senior citizens spend a much higher percentage of their limited income on the basics of housing, transportation, food, and insurance. So, these increases have a much greater impact on seniors than rich bankers and Princeton scholars. The figures for key items over the last decade prove the point that seniors have fallen further due to the inflationary policies of the Federal Reserve.
Helping Housing?And the one speck of food That he left in the house, Not only was Ben Bernanke complicit in aiding Greenspan in creating the housing bubble by keeping interest rates too low for too long, completely missing a two standard deviation (PhDs love this stuff) price bubble right in front of his eyes, telling Americans that we had a strong housing market, telling Americans that housing price declines would not affect the economy, not regulating or policing the rampant mortgage fraud that was happening under his nose, and aiding and abetting the very criminal banks that created the bubble, but now he has blatantly lied by saying his QE2 $600 billion monetization of our debt is to support the housing market. If you believe this, I have some prime real estate with great views in the mountains of Afghanistan to sell you. In his October 15 speech, Bernanke assured the world that QE2 would reduce long term interest rates. On November 4, he stated: “Lower mortgage rates will make housing more affordable and allow more homeowners to refinance.” On October 7, one week before Bernanke gave the green light to QE2, the 10 Year US Treasury rate was 2.38%. Today it stands at 3.3%, almost 100 basis points higher. I’m guessing this guy isn’t very good picking his weekly football pool. Interest rates have done the exact opposite of what he proclaimed they would do. These rates have surged in the face of an already weakening economy, as unemployment continues to rise and home prices continue to fall. A 100 basis point rise in Treasury bonds piles approximately $120 billion more interest expense per year onto the backs of future generations. The rate on 30 year fixed mortgages has surged to 5.07% from 4.4% in mid-October. That should do wonders for refinancing and home purchases. Bernanke’s actions have priced millions of people out of the market. He has inflicted more damage on an already teetering housing market and has insured that home prices will plunge by another 20% in the next year.
Despite the trillions of dollars thrown at the housing market by Bernanke and Obama through home buyer tax credits, mortgage modification programs, purchasing toxic mortgages from the criminal banks at 100 cents on the dollar, artificially reducing mortgage rates, and forcing those government run disasters Fannie Mae, Freddie Mac and the FHA to backstop more bad loans, home prices are resuming their downward trajectory to fair value. That value is at least 20% lower. With 22.5% of all properties (10.8 million properties) with a mortgage having negative equity, the housing market was already in dire straits. With the surge in mortgage rates caused by Ben Bernanke’s actions, a rapid plunge in prices can be expected in 2011, resulting in more foreclosures and negative equity swamping millions.
The truth is that Ben Bernanke could care less about the average American homeowner making $48,000 per year. The real purpose of QE2 was to further enrich his masters on Wall Street and the ruling elite who control the wealth in this country. Wall Street Wealth Bailout
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| Big Chunky Bits of Silver (**) Posted: 20 Dec 2010 05:53 AM PST Share this:
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| Posted: 20 Dec 2010 05:23 AM PST By Howard S. Katz, The Gold Speculator Right now commodities are where the action is in the financial markets. And the precious metals are where the action is in the commodities market. And silver is where the action is (for the time being) in the precious metals markets. Silver can be described as gold's little brother. It lags along behind gold, underperforming for a long time. Then, all of a sudden, it comes to life, makes up all of its underperformance and goes on to exceed gold to the upside. Gold has a reputation for stability and conservatism. Silver is volatile and subject to big price moves – both up and down. The key technical measure on silver at the present time is the price objective line, which started in March 2008 at 21. Technical theory does not say when silver will reach its price objective, only that at some point it will. Further, this is a minimum price objective. The commodity may get up to the objective line, back away for a while and then make a second return to the line.
The chart on page 1 contains a great deal of information about the course of the price of silver over the next few years. But to understand the chart properly, it is first necessary to be able to read…THE ENGLISH LANGUAGE. I am sure that, when you were back in the 8th grade, you used to grumble about your English course. "What use is all this stuff anyway?" "I can read OK. What I want to do is to get into the real man's world where they are making money." Well, here you are in the real man's world where we are making money. (I moved from gold into silver in mid-September of this year held for the big autumn run-up, briefly stepped aside in November and then reestablished my silver position.) And your instructor is telling you that one of the requirements is the precise use of the English language. Your 8th grade English teacher was right. The price objective line in silver is full of information, information which can make us the big bucks – if it is interpreted correctly. First, a price objective line, which occurs with regard to a triangle, is different from a price objective point, which occurs with a head and shoulders, a rectangle, a flag or pennant, etc. The point gives us one number. The line gives us many numbers spread out over time. For example, a pennant formed in silver in November with a price objective of $40 (probably by mid-February). This is one number, simple and easy to play. However, the price objective line for the ascending triangle in silver on p. 1 is continuously rising. It is about $60 right now. It will be at $100 in January 2012, and by Sept. 2012 it will be at $150. This does not mean that silver absolutely has to get to one of these points. But it does have to get up to the line at some time. Clearly, the nearer points on the line will be exceeded, but the further points will never be attained. Here is where I have difficulty and plead for the help of the English teacher. For example, I may make the statement above, "The price objective line in silver will be at $150 by September 2012." Indeed, this is a true statement. But some subscribers will read this as, "Silver will be at $150 by September 2012." This is a much simpler, but wrong statement. It is so much easier to deal with the simple than the true. It is sort of like the case of the policeman who comes over to help a drunk looking around in the gutter. "I lost my car keys" says the drunk. So the policeman helps him look. After they have looked for a while, the policeman says, "Are you sure you lost them here? And the drunk says, "No, I lost them in the middle of the block." So the policeman says, "Then why are we looking here?" And the drunk says, "The light's better here." This technique does not work too well for finding lost keys, and it certainly does not work at all well for taking money out of the commodity market. You cannot neglect essential elements of the puzzle simple because "the light's better here." This is what I mean by precision of language, and if you did not learn this in 8th grade, then go back to your teacher, beg her forgiveness and crack the books on a special study course to learn now what you should have learned then. As noted, silver is more speculative than gold. As a result, when the precious metals markets are conservative, traders move into gold. During such periods gold will outperform silver. For example, starting in 2008 the media in this country started screaming "deflation." Both gold and silver got hit hard, silver worse, but they recovered quickly. In Sept. 2009, gold broke out of its ascending triangle to the upside. A year later silver did the same thing. By that time, gold had advanced by 25% (March 2008 peak to early Sept. 2010), and silver was flat. (OHE was able to remain in gold for the period up to early Sept. 2010 and then switch to silver at that time.) A move in silver will normally last half as long as the corresponding move in gold and peak not too far apart from it. (In early 1980, gold peaked in January; silver peaked in March. The gold move of the late '70s lasted 3½ years. The corresponding silver move lasted 2 years+.) A move in silver is a lot of fun because it has great volatility to the upside, but this often happens with regard to commodities. Special situations develop, and there is simply not enough supply to meet demand. A case in point was early November when silver peaked at $29. The silver bulls had been making money through the autumn, and they kept plowing this money back into the market. The more money they made the more they plowed back, and the cycle built on itself. Obviously, this cannot go on for too long. Either the exchange will cool things down by raising margin requirements or fundamental traders will come in with large sell orders. Either way, the sellers can break the market, and …watch out below. By the way, there has been a group of people going around the gold/silver web sites alleging a giant conspiracy to manipulate the price of silver in a downward direction. And I am getting sick of this. To manipulate any free market is virtually impossible. If one buys an economic good and then tries to manipulate it higher, one must spend an enormously greater amount of money doing this than one can reasonably make. And there has been no successful manipulation on record in economic history. First, this was proven by the free market economists. Second, it was tried by Bunker Hunt in the late 1970s. This idiotic venture cost him almost $6 billion of his father's inheritance money (the H.L. Hunt fortune). Anyone who wants to make money in the speculative markets MUST anticipate some other people coming in to buy his good away from him at a higher price. If you can't see that coming, then you should not be in that market. I see people coming in to buy gold and silver away from me because Presidents Bush-Obama have been printing massive amounts of money, and this will cause all goods to skyrocket in price with the precious metals first on the march. But this is reality, not manipulation. And, quite frankly, a scheme as fantastic as is being alleged, is nothing more than the invention of crackpots. No one can manipulate market forces for 10-20 years. If you are listening to these allegations, then you need to wake up and study basic economics. Good speculation has to be based on economic principles. If you don't know what you are talking about, then your chances of making it in the markets are not equal to a snowball in H___. Since gold and silver will probably peak at about the same time, I will be looking for signals from both the chart on p. 1 and below to coincide.
We are in the middle of a powerful move in the precious metals markets. These markets are on fire, and now is the time to strike while the iron is hot. You all know that Ben Bernanke is completing a program, called QE-2, which will result in an approximate tripling of the U.S. money supply from mid-2008-mid-2011. And this will lead to an approximate tripling of the U.S. price level within the coming 2-3 years. It is to help you protect yourself and make profits from this massive creation of money that the One-handed Economist is focusing on the precious metals markets at this time. If you would like to subscribe to the One-handed Economist ($300/year), then go to my web site, www.thegoldspeculator.com, and press the Pay Pal button. Or, send $290 to: The One-handed Economist, 614 Nashua St. #122, Milford, N.H. 03055 ($10 cash discount). Thank you for your interest.
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| Why I keep buying Silver and Gold Posted: 20 Dec 2010 05:01 AM PST By Bengt Saelensminde I don't know what's going to happen to the financial system — I don't know how sick she is and I wouldn't know the cure even if I did. But I do know a bit of history. And history tells me that our financial system is in serious trouble. If not today, then tomorrow… after all, every paper-based currency system that's ever existed has come undone. And 'coming undone' arrives in different guises. Most simply the authorities say 'today, we're issuing one new pound for every 100 you currently hold.' Those sorts of revaluations were common in the past — especially in what we like to call the 'banana republics'. Okay, so the UK isn't quite a banana republic. But there are other routes to currency devaluation. They can just print a load more of it for example – and then let inflation 're-base' the currency until it's unrecognisable. That's exactly what's been going on since 1971. Sure we've still got the same 'new pound', but according to gold, it's been hammered down to about a fortieth of its value! Remember too that history is on our side… paper currencies have a 100% record. They always fail. And the old metal currencies have a 100% record too. They always maintain purchasing power. … Why not find your local coin dealer. Have a chat with him. See if he's still got some gold or silver left. If he's anything like my newfound friend, the chances are he's running out of stock. I'd pick up whatever you can while there's still availability. [source]
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| US Wealth Distribution: Where Zombies Go to Feast Posted: 20 Dec 2010 05:00 AM PST A warning… Bad stuff coming! We've come to the warm latitudes for our Christmas holiday. Your editor didn't really want to do so. He travels so much for business, he longed to stay home for Christmas. He imagined himself sitting in front of the fire…happily drinking eggnog and eating fruitcake. Or, cutting down trees and mending fences. It was not to be. He was outvoted. Here we are in Florida…on our way to Nicaragua…where we will spend Christmas not too far from the scene of an incipient border war… We haven't been down there for 2 years. We're going to find out what is going on. First, we have to warn readers. Bad times are coming. Our Indian colleagues alerted us. The Hindu era of Kalyug is beginning. What's Kalyug? It's the "age of bad stuff…about 432,000 years of it!" Whoa. Well, that kind of puts our worries about de-leveraging debt crises into perspective, doesn't it? By our calculation, de-leveraging will end and we'll still have about 431,992 years of Kalyug to get through. Those Hindus really do think long-term, don't they? We Episcopalians are more short-term oriented. We'll worry about things 6 months out. Maybe 24 months. But that's about it. Not much action on Friday. The Dow was down 7. Gold was up $8. What do we see 24 months into the future? Well, you'll probably think we're kidding about this, but we're actually very serious: The zombies are taking over. We're not joking about this zombie thing. Look at what is happening. Here's a report from Bloomberg: Dec. 15 (Bloomberg) – The gap between the haves and have-nots in the US is being drawn along geographic lines, Census Bureau data showed yesterday. The number of counties where median household income decreased is almost 10 times the number that saw an increase, according to a Bloomberg analysis of Census figures comparing an average of the years 2005-2009 with 2000. The government figures also showed a concentration of wealth and education in coastal states. The Washington metropolitan area emerged as the wealthiest and most educated region of the past five years. The only three communities with median household incomes higher than $100,000 are in suburban counties in Virginia. Maryland, which also borders the nation's capital, saw income levels in Howard County increase at the eighth-fastest pace in the US since 2000. The Washington suburbs are home to government contractors such as Bethesda, Maryland-based Lockheed Martin Corp., the world's largest defense company, and General Dynamics Corp., the Falls Church, Virginia-based maker of Abrams tanks and Gulfstream business jets. The Washington Post, the zombie paper, gave the news a positive tune: "Area Counties Richest in Nation," was the headline…or something like that. So you see, this "geographical" distribution is really a zombie distribution. If you work for the feds – directly or indirectly – you get more money. Most likely, you're no longer creating wealth; you're consuming wealth that others created. That's what being a zombie is all about. And as a society becomes more corrupt and degenerate, there are more and more zombies and fewer wealth-creating citizens. The zombification process runs deep. It changes the nature of what most people regard as "wealth." Instead of wanting to own a profit-making business, or lend to a wealth-increasing enterprise, more of what passes for wealth is actually a claim against the government. It is a promise by sitting politicians to rip off the future on behalf of the present. Let's look at how it works… In an economy like India's, a man who wants to prosper will start a business of his own…or invest in someone else's business. If he wants a decent retirement, he will have to save real money. He'll need real capital…which supports him by producing real interest or real earnings. He has a claim against future increases to the world's wealth. But that is wealth that he helped create…by saving and investing. But in the US, more and more people depend on the government for their retirement financing. The government pledges to take money from future earnings too. But it is a zombie claim; it does not depend on adding to the world's wealth. It merely takes away the wealth of others. If an American wants a good-paying job, he looks to the government itself, knowing that its salaries are higher than those in the private sector, and more reliable. And even if the American invests in a private business, the enterprise is more and more likely to depend on the government for contracts, subsidies, tax breaks, regulatory approval or bailouts. Gradually, "wealth" itself becomes zombified. Insurance policies are backed by government bonds – local or federal. Pensions are heavily dependent on claims against the government. And don't forget that 42 million people in the US depend on government handouts just so they can eat. Food stamps – the breakfast, lunch and dinner of zombies – have never had so many takers. This process is completely predictable. The more you subsidize zombies, the more zombies you get. And as the zombie population grows, it becomes more difficult to support. Finally, the paper zombie claims – US Treasuries/welfare/government employment/the US dollar – fall in value. There are too many of them for the private sector to sustain. PIMCO chief and bond expert Bill Gross says the Fed's purchases of US Treasury bonds "will likely signify the end of the great 30-year bull market in bonds." That's just the way it works. As the parasites grow, the host weakens. The more you borrow, the lower your credit rating. The more women you date, the harder it is to remember their names. Bill Bonner US Wealth Distribution: Where Zombies Go to Feast 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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| The Holiday Grind Is Here For 10 Days Only – Are You Ready? Posted: 20 Dec 2010 04:52 AM PST By Chris Vermeulen, TheGoldAndOilGuy It's that time again when volume dries up and prices rise into the new year. A lot of individuals are scrambling to prepare for the holidays, even though we had a year to prepare. The big money has already done most of their year end shuffling and will be taking it easy until January. The market is overbought and sentiment readings are at extreme levels which in the past have been the start of large sell offs and even bear markets. While I am keeping a close eye for a top, there is not much we can do but stay long stocks and commodities until the market tips its hand and distribution selling is in control. The U.S. federal government is the only wild card going into year end that should be on traders' radars. They have been doing a great job boosting prices in the equities and commodities market, but can they continue to hold things up when the big money and the proverbial herd start unloading positions in 2011? SP500 Holiday Grind – Daily Chart
US Dollar On Pause For A Couple of Weeks
Weekend Conclusion: If you would like to learn more about trading while getting trade alerts for ETFs join my newsletter at: http://www.TheGoldAndOilGuy.com Chris Vermeulen
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| Structural Unemployment for “Dummies” Posted: 20 Dec 2010 04:51 AM PST By Jeff Nielson, Bullion Bulls Canada Let me preface this piece by first telling readers that the "dummies" to whom this commentary is addressed are not yourselves. Nor am I trying to infringe on anyone's trademark. No, the "dummies" to whom this piece is dedicated are our "leaders" and our "experts". It is frustrating to the point of madness to see media talking-heads parrot the phrase "structural unemployment" over and over again while quoting these illustrious individuals, and yet not one of them has the tiniest clue as to the actual meaning of the term. The fact that this situation persists despite having covered this topic several times in my own writing demonstrates one of two possibilities (perhaps both?). Either global leaders and market experts are not (yet) subscribers of my work, or, they read it but couldn't understand it. This piece is dedicated to explaining the concept of structural unemployment in such painful simplicity that each and every person who reads it will, in turn, be able to explain it to our esteemed leaders and experts. No treatise for "dummies" would be complete without starting with a simple definition. In the case of "structural unemployment", the definition is the epitome of simplicity: structural unemployment is unemployment caused by a faulty structure of the labour market. Before my critics accuse me of circular reasoning, or simply semantics, let me defend myself. With any simple term, we cannot define it without encountering the trap of needing to define it in terms of itself – or simply borrow a close synonym, and do the same thing. Thus, anyone trying to define "big" would inevitably find themselves forced to use terms like "large", or "greater than", and be subject to identical criticisms. With a term like structural unemployment, which is literally self-explanatory, we cannot possibly create a definition which does not involve "a problem with structure". Such a definition may seem pointless, and yet even this simple step is beyond our leaders and experts. Consider this: we know what that none of these charlatans are capable of understanding the definition of structural unemployment any/every time we hear one of them attempt to formulate a "solution". These exercises in ineptitude fall into two categories: "job retraining" and/or "improving economic performance". With respect to defining structural unemployment, let's take one more step down our road of simplicity. When I say that our labour markets have "faulty structures", we can instantly identify the precise nature of that structural problem (by definition): our economies are now structured to provide far too few jobs in comparison to the total number of workers. This may also seem maddeningly self-evident, but it too is beyond the grasp of the leaders and experts. In an economy which, in absolute terms, simply produces far too few jobs, job-retraining by itself is nearly irrelevant. When you shuffle a deck of cards, you haven't "restructured" that deck, in any meaningful sense. All you have done is changed the order, with respect to which cards come to the top of the deck first. It does no good to simply "retrain" large numbers of workers when (for the most part) pushing one of these "retrained" workers back into the job market merely takes away the job of a current worker (who then goes to "the discard pile"). If we are not doing something to radically increase the total number of jobs then we are merely pretending to address the problem (something at which our "leaders" excel). More articles from Bullion Bulls Canada….
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| Gene Arensberg: Bullion banks still reducing silver shorts Posted: 20 Dec 2010 04:48 AM PST 8:40p ET Sunday, December 19, 2010 Dear Friend of GATA and Gold (and Silver): The Got Gold Report's Gene Arensberg reports tonight that that latest trading data shows that the biggest commercial traders continue to reduce their short positions in silver. And while the U.S. Commodity Futures Trading Commission last week failed to impose position limits in the precious metals futures markets, Arensberg notes that the limits recommended by the commission's staff — no more than 25 percent of deliverable supply — would require the biggest commercial traders to keep cutting their short positions. Arensberg's commentary is headlined "CFTC Delays Position Limits; Bullion Banks Reduce Silver Shorts" and you can find it at the Got Gold Report here: http://www.gotgoldreport.com/2010/12/cftc-delays-position-limits-bullion… Or try this abbreviated link: CHRIS POWELL, Secretary/Treasurer Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| Join GATA at the Vancouver conference in January Posted: 20 Dec 2010 04:48 AM PST 8:11p ET Sunday, December 19, 2010 Dear Friend of GATA and Gold (and Silver): GATA will be participating again at the Vancouver Resource Investment Conference, to be held Sunday and Monday, January 23 and 24, 2011, at the Vancouver Convention Centre West at Canada Place on Coal Harbour. In addition to GATA Chairman Bill Murphy and your secretary/treasurer, speakers will include GATA favorites Al Korelin of the Korelin Economics Report, silver market analyst David Bond, Frank Holmes of U.S. Global Investors, newsletter writer Jay Taylor, Mau Capital's John Lee, Peter Grandich of The Grandich Letter, GoldSeek.com proprietor Peter Spina, and Kitco.com senior analyst Jon Nadler. Dozens of resource companies will be exhibiting and making presentations, and the conference is always a great opportunity to meet and question resource company executives. To register for the conference and to learn more about it, please visit: http://cambridgehouse3.com/conference-details/vancouver-resource-investm… Or try this abbreviated link: CHRIS POWELL, Secretary/Treasurer 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
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| Paul says he'll ask Fed about transactions with foreign banks Posted: 20 Dec 2010 04:47 AM PST Let's hope that includes gold swaps like the ones the Fed acknowledged here: http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf * * * Congressman Paul Says Fed Transparency Is His Goal By Tabassum Zakaria http://www.reuters.com/article/idUSTRE6BI1BD20101219 WASHINGTON — Republican Congressman Ron Paul, the new head of the subcommittee that oversees the Federal Reserve, said on Sunday he will seek greater transparency but will not be sending subpoenas to the central bank chairman from Day 1. Paul, a longtime critic of the Fed, will be the new chairman of the domestic monetary policy subcommittee of the House Financial Services Committee when the new Congress is seated in January. "Now that doesn't mean that the first week in January I send over a subpoena for (Fed Chairman Ben) Bernanke and demand that he come over with a pile of papers. I don't think that would be logical," Paul said in an interview on C-SPAN. He will be sending requests for information to others at the Federal Reserve such as the accountants, "and say this is what I want, and see what happens," Paul said. "And then they can still hide behind the law if I want to demand every transaction with foreign banks," he said, adding that it would benefit Americans to know who was getting bailed out. Paul has written a book called "End the Fed" and believes the dollar should be backed by gold or silver. The United States stopped linking the dollar to gold in 1971. Republicans will control the House of Representatives in January after winning a majority of seats in the November elections on a wave of anti-government and anti-incumbent sentiment. 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
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| “We are Now Demonetizing Money” Posted: 20 Dec 2010 04:47 AM PST Manuel Hinds, former finance minister of El Salvador, shares some thoughts on paper money in this Wall Street Journal op-ed today, making a number of very good points about the current global monetary system, all of which should just add to the cognitive dissonance being experienced by mainstream economists and policymakers.
And that's precisely why a return to sound money – in whatever form – is not likely to come voluntarily. It would take power and control away from governments, their central banks, and the rentier class to which they've now become beholden.
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| Oil, Gold and Silver Miner Projections for the Year of the Golden Bunny Posted: 20 Dec 2010 04:47 AM PST Marco G. submits: The upcoming year 2011, in the Asian Zodiac, is the year of the "Metal Rabbit", or if you will, the year of the "Golden Bunny", in following the tradition, there is a 60 year Golden Cycle for these zodiac animals. This new Asian lunar year is poised to begin on February 3, 2011. We are looking forward to the "metals" aspect of the Rabbit year to help us obtain a bit of an edge in the equities markets for this upcoming 'Golden Bunny' year. Fall of the Tiger Year
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| Calculating Mesabi Trust's Q4 Distribution Posted: 20 Dec 2010 04:47 AM PST James Duade submits: The Mesabi Trust (MSB) earns royalty income off of the amount of iron ore harvested off of trust lands in the Silver Bay Area. As with most trusts, Mesabi has no decision making power in determining how much ore is harvested, what price the ore is sold for, or how much of the ore is sold at what time. Those decision making rights are the jurisdiction of the operating company named Northshore mining, which itself is a subsidiary of Cliffs Natural Resources (CLF). Mesabi mainly earns two type of royalty income which largely composes the distribution rate: Base overriding royalties, and royalty bonuses. Language from their most recent 10-K illustrates how both royalties are calculated: Base overriding royalties
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| Silver Managed Money Longs: Get Ready for a New Rally Posted: 20 Dec 2010 04:47 AM PST Ananthan Thangavel submits: As we have discussed many times recently, we expect a renewed rally in silver to coincide with Managed Money reestablishing long positions. In the week ending December 14, Managed Money net long positions were down to 24,623 contracts from 26,799 on December 7. The five-year high for Managed Money net longs was 48,532 contracts, set on September 28. We expect that as Managed Money starts to reimpose the 24,000 contracts it would take to get back to the high, silver will begin a new rally that will take it significantly higher than its current level. To illustrate why we are so confident in this outlook, we have prepared the following chart:
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Overnight exercises by South Korea's military continued to lend support in New York after carrying gold prices higher during the Asian trading session. South Korea held a live-fire exercise on the border island of Yeonpyeong, despite North Korea's promise to attack the island if such tests were concluded. North Korea had attacked the same island on Nov. 23, a day after a similar test was held. Meanwhile, last week's European Union economic summit failed to shed more light on how euro zone members will resolve their debt crisis…
5,000% may seem like a lot to stock traders but that's exactly why those of us in the top 2%, who trade derivatives and not stocks, LOVE inflation. As I was saying to 
What's our solution? I already told you - we trade our derivatives and make lots of money because the vast majority of the top 1% came out of the Great Depression and WWII in excellent shape and they would have been in much better shape if Roosevelt hadn't taxed their income and given it away to the poor. That's why, this time, we're going to do it right - without all the liberal bellyaching along the way. I tried to care - really I did but it just seems so overwhelmingly out of fashion these days...
Unbridled monetary printing led us to the collapse of Bretton Woods in the late 1960s and then into the stagflation of the 1970s and early 1980s. Then, after a brief recess that ended in the mid-1990s—the result of Paul Volcker's refusal to print money during his tenure as Federal Reserve chairman—we returned to trigger-happy monetary creation.| You are subscribed to email updates from Save Your ASSets First To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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