Gold World News Flash |
- Does the Gold-Silver Ratio Really Revert to Its Mean?
- Will The Housing Market Continue To Decline?
- Serious problems ahead for the British pound
- Crude Moves Toward $90 as Equities Rally, Gold Little Changed but Trend Intact
- A SuBPRiMe CHRiSTMaS CaRoL (PaRT II) (plus MR NeuTRoN UPDaTe)
- Gold Seeker Closing Report: Gold and Silver End Slightly Higher
- Wake-Up Call: Top 10 Trends of 2011
- James Turk: Pound may beat dollar to hyperinflation
- Stewart Thompson: Central banks use gold to control markets
- Has Gold Peaked?
- Lefty Rep. Dennis Kucinich starts his own campaign to end the Fed
- A Single Trader, JP Morgan, Holds 90% Of LME Copper
- 'Career Average' to Replace Final Salary?
- Minefinders: The Best of Both (Gold and Silver) Worlds
- Commodity market concentration starts to worry even Wall Street Journal
- A Global Glut of Deepwater Oil…With One Major Exception
- In The News Today
- Printing Money Not Actually in Bernanke’s Bag of Tricks
- TUESDAY Market Excerpts
- IMF completes gold sales program
- LGMR: Gold 2011 Forecast at $1500, $1600 or "Outrageous" $1800 on Euro Crisis
- Money Creation Home Invasion
- IMF concludes gold sales
- All the Gold Price Needs To Do Is Not Drop, That Shows it's Planning Another Advance
- The Wonderful World of Charles Fabrikant
- The "Sovereign Man" On What To Look For "When The Gold Market Tops"
- Bernanke Denies Printing Money. Mogambo Not Convinced
- 2011 Gold Outlook
- Gold Daily and Silver Weekly Charts
- Gold is Flat
- CFTC Delays Position Limits
- Gold's gains to stay for the long haul
- Tinsel Tuesday – Market Decorations Make Us Merry
- As ETFs Pass $1 Trillion In AUM, What Next?
- Stop Shooting Yourself in The Foot! Buy The Real Silver
- The U.S. Dollar: Backed By The FULL FAITH AND CREDIT Of The Federal Reserve Printing Press
- Silver Outperforms Gold - Profit! Silver Underperform Gold - Profit Again!
- Pretium Resources Closes Initial Public Offering and the Acquisition of the Snowfield Project and Brucejack Project
- Top Pick Candidate for the AOL Challenge
- Debt at Every Turn: New Governors Attack the Debt Crisis
- Vietnamese seek safety in gold as currency wobbles
- What to Expect From Gold Prices in 2011
- THe TWeLVe ZeRo HeDGe DaYS oF CHRiSTMaS
- What's in Your Stocking: Gold or a Pig's Tail?
- Russia's Central Bank Purchases 300,000 Ounces of Gold in November
- Alka Singh: Gold Equities' Upside Greater than Gold
- Dec 21st- A sample real time ABC pattern
- Gold and Dow: Liquidity Flows For 2011
- A Vote for Gold
| Does the Gold-Silver Ratio Really Revert to Its Mean? Posted: 21 Dec 2010 06:30 PM PST Mike Stall submits: In our earlier essay, we saw how the silver-gold pair is ideal to bet on for mean reversion. We also saw how to make use of the mean reverting properties of any ratio. Continuing on that topic, we will investigate whether mean reversion holds true for the gold-silver ratio in particular. We will examine variables one should watch over when looking at regime changes (points where the mean is set to new values). We will also explore a simplistic trading strategy on the ratio based on some core parameters that determine entry and exit points. It must be noted that this essay is a simplistic approach to pair study. Real life strategies could be more complex. Also, mean reversion is not a winning proposition all the time. With proper stop losses, however, it will be observed that it works out well on the winning side over a number of trades. Where pair trading scores over normal trading is that positions are hedged and market exposure is lesser than single positions. Also, when one realigns portfolios (i.e. using pair trading signals to work in the long term), the question of losses is obsolete – the attempt is to increase returns of the precious metals portfolio and it has been observed that acting on information from the ratio will increase returns significantly (as compared to not acting on it at all). Complete Story »
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| Will The Housing Market Continue To Decline? Posted: 21 Dec 2010 06:10 PM PST
This article originally appeared in The Daily Capitalist. The quick answer to the headline of this article seems to be yes. The volume of housing that is in mortgage trouble is rising as prices drop in vulnerable markets around the country. There isn't a sufficient floor of buyers in those markets to stop further declines and foreclosure sales that appear to be on the horizon. It depends on the market. For example, the recent Case-Shiller 20 cities report shows that coastal California has had a positive trend: Los Angeles +4.4%; San Diego +5.0%, and San Francisco +5.5%. Another area of strong growth is Washington DC (+4.5%) which is an island of government transfer payments in a sea of trouble. The bad news is that estimates of homes underwater and likely to default have gone up, depending on who you wish to listen to. The most recent and scariest number floating around is from Laurie Goodman at Amherst Securities:
Lender Processing Services (LPS) tracks performance on 40 million mortgage loans in the country. Their October report says that delinquencies remain about 2.7 times historical average, foreclosure inventories are 7.4 times and rising. Delinquencies have flattened a bit as more homes are moved to foreclosure. More loans are starting to move into foreclosure in the six and 12 month delinquency:
Based on Ms. Goodman's research, Nouriel Roubini sees losses to lenders reaching $1 trillion, assuming lenders recover 50 cents on the dollar on an average $200,000 per home. These are thumbnail estimates but previous estimates were that there were perhaps 3.5 million homes of shadow inventory. CoreLogic reports on negative equity in homes:
The interesting thing is that low interest rates do not seem to provide the stimulus for the housing market:
That suggests that neither rising rates nor tighter lending standards will have a major impact on housing as long as people perceive that prices are still falling. It goes without saying that housing starts are still at historical lows. Home sales are still off. RE/MAX reported that home sales in November fell nearly 5% from the prior month and are about 26% lower than a year earlier. The September S&P Case-Shiller home-price indexes reported that home prices declined:
I agree with many analysts that the Cash For Houses tax credit program just delayed the inevitable, caused a momentary spike in sales, and then after this summer when the credits expired, the market reasserted itself. Another cruel unintended consequence is that many buyers who bought because of the credits now are finding that their homes are declining in value. Here is something on the positive side: net worth is increasing because of deleveraging. The Fed's Flow of Funds report said:
The numbers show that while mortgage debt is being reduced, the value of homes is declining more. It is likely that this trend will continue. But 11 million more foreclosures? The trouble with historical analysis is that it doesn't predict the future. Goodman's analysis is thorough, but it is based on assumptions that are yesterday's news. It is difficult to refute her forecast, it all depends on her assumptions, but I'm not sure I buy in to it. There are too many things that can prevent 11 million foreclosures. One thing is an increase in money supply and resulting price inflation. Because I don't see unemployment improving dramatically in 2011, it is my belief that the Fed will continue its quantitative easing program past the June, 2011 period it has set for itself to buy $600 billion of U.S. Treasurys. It is conceivable that the Fed's balance sheet will expand beyond $1.7 trillion to much more than $2 trillion. I believe that will cause price inflation. Price inflation will appear to cause a rise in housing prices or at least flatten prices out. This in turn will (i) bail out borrowers as their homes increase in value and push toward positive equity, (ii) allow home owners to refinance their mortgages, and (iii) attract buyers to the market putting upward pressure on home prices. It is clear that housing prices will continue their slide for at least another year in the softer markets.
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| Serious problems ahead for the British pound Posted: 21 Dec 2010 05:09 PM PST FGMR - Free Gold Money Report December 21, 2010 – Last week the British pound fell 3.0% against the US dollar. Some say it was because of UK bank exposure to Spain, which Moody’s warned could be downgraded. Others blamed the UK’s close economic link and heavy debt exposure to Ireland, which Moody’s did actually downgrade last week by 5-levels to Baa1. This low grade is barely above junk status. These downgrades in different corners of Europe no doubt had some impact on Sterling’s weakness, but there is I think another factor closer to home. It is the growing awareness of the runaway spending and borrowing by the British government. Despite all the rhetoric and promised cuts in spending by the newly elected coalition, the hard fact is that government spending and borrowing continue to soar – and look as if they are spiraling out of control. The following chart illustrates the magnitude of the problem as UK government debt nears...
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| Crude Moves Toward $90 as Equities Rally, Gold Little Changed but Trend Intact Posted: 21 Dec 2010 04:25 PM PST courtesy of DailyFX.com December 21, 2010 08:51 PM Crude is hovering just under $90 ahead of tomorrow’s government report on U.S. petroleum inventories. Gold is consolidating as 20%+ gains for the year are digested. Commodities – Energy Crude Moves Toward $90 as Equities Rally Crude Oil (WTI) - $89.95 // $0.13 // 0.14% Commentary: Crude advanced for a third straight session, adding $1.01, or 1.14%, to settle at $89.82. Oil is now at the very top end of the $87 to $90 range that has contained prices this month. Another 2-year high in U.S. equity markets was the catalyst, with seemingly no bad news of significance on the radar at the moment. The Fed continues to be extremely supportive with its loose monetary policy, and corporate earnings are rebounding swiftly despite persistently high unemployment. More importantly, global growth is booming with the IMF expecting 4.2% growth in 2011 after 4.8% growth in 2010. It’s easy to get caught up in the v...
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| A SuBPRiMe CHRiSTMaS CaRoL (PaRT II) (plus MR NeuTRoN UPDaTe) Posted: 21 Dec 2010 04:05 PM PST
continuation... When E Benron Scrooge awoke, it was still very foggy and extremely cold, and there was no noise of people on Wall Street. Keynes' ghost bothered him. He didn't know whether it was a dream or not. Then he remembered that a spirit should visit him at the opening NYSE bell. So instead of having a Brazilian butt, head and back wax, E-Benron Scrooge decided to lie awake and wait what to see what happens. Suddenly, the NYSE opening bell struck. Light flashed up on his trading screen and a small hand drew back the curtains of his bed. Then E-Benron found himself face to face with the visitor. It was a strange figure – like a child: yet not so like a child as like an old decrepit Randian fool. "Who, and what are you?" E-Benron Scrooge asked the ghost. "I am Maestro the Ghost of Busted Bubbles Past. Rise and come with me." The ghost took Scrooge back in time, to a place where E Benron Scrooge studied as a young PhD candidate. There Scrooge could see his younger self playing foolish market equilibrium games with other delusional central banker wannabes. They were cheerfully running around a cheap imported Chinese Christmas tree; and although they were hopelessly naive in their theoretical assumptions, they had lots of geek fun. The spirit also took E-Benron Scrooge to a money printing factory where Scrooge was an apprentice. Scrooge saw the merry Christmas Eve they spent on the printing presses with his boss Mr Fuzzidice and his family. There was food and music and dancing and everybody was happy. Then the spirit took Scrooge to yet another place. Scrooge was older now. He was not alone, but sat by the side of a beautiful young girl. There were tears in her eyes. "It is sad to see," she said, softly. "that yet another moron has displaced me – the love of fools gold. Your heart was full of real gold once, but now …? I think it is full of QE crap. Fiat fraud begets fraud...swindle begets swindle...error begets error and the whole cycle soon becomes woebegotten. May you be happy in the lunatic path you have chosen." "Spirit," said Scrooge, "show me no more. Take me home. Why do you torture me?" "One shadow more," said the ghost. They were in another scene and place; a room, not very large or handsome, but full of comfort. There was a happy group celebrating Christmas with all their warmth and heartiness. Scrooge recognized his former girlfriend. She was married now and had children. Sweetheart said her husband with a smile, "I saw an old friend of yours this afternoon. E-Benron Scrooge it was. I passed his office window; and as it was not shut up, and he had a candle inside, I could see him there. His QE plan to revive the economy is faltering miserably and there he sat alone. Quite alone in the world, I do believe." "Spirit," said Scrooge in a broken voice, "Take me back! I cannot bear it any longer." He struggled with the ghost to take him back. And finally Scrooge found himself in his own bed again. He was very exhausted and sank into a heavy sleep.
SPECIAL UPDATE: MR NEUTRON RETURNS
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| Gold Seeker Closing Report: Gold and Silver End Slightly Higher Posted: 21 Dec 2010 04:00 PM PST Gold gained as much as $6.48 to $1391.98 at the open of trade in New York before it fell to see a $4.60 loss at $1380.90 by a little before 10AM EST, but it then rallied back higher for most of the rest of trade and ended near its earlier high with a gain of 0.16%. Silver jumped over 1% to as high as $29.563 before it fell back to as low as $29.005 in midmorning New York trade, but it also rallied back higher for most of the rest of trade and ended near its earlier high with a gain of 0.24%.
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| Wake-Up Call: Top 10 Trends of 2011 Posted: 21 Dec 2010 03:36 PM PST After the tumultuous years of the Great Recession, a battered people may wish that 2011 will bring a return to kinder, gentler times. But that is not what we are predicting. Instead, the fruits of government and institutional action – and inaction – on many fronts will ripen in unplanned-for fashions. Trends we have previously identified, and that have been brewing for some time, will reach maturity in 2011, impacting just about everyone in the world. 1. Wake-Up Call In 2011, the people of all nations will fully recognize how grave economic conditions have become, how ineffectual and self-serving the so-called solutions have been, and how dire the consequences will be. Having become convinced of the inability of leaders and know-it-all "arbiters of everything" to fulfill their promises, the people will do more than just question authority, they will defy authority. The seeds of revolution will be sown…. 2. Crack-Up 2011 Among our Top Trends for last year was the "Crash of 2010." What happened? The stock market didn't crash. We know. We made it clear in our Autumn Trends Journal that we were not forecasting a stock market crash – the equity markets were no longer a legitimate indicator of recovery or the real state of the economy. Yet the reliable indicators (employment numbers, the real estate market, currency pressures, sovereign debt problems) all bordered between crisis and disaster. In 2011, with the arsenal of schemes to prop them up depleted, we predict "Crack-Up 2011": teetering economies will collapse, currency wars will ensue, trade barriers will be erected, economic unions will splinter, and the onset of the "Greatest Depression" will be recognized by everyone…. 3. Screw the People As times get even tougher and people get even poorer, the "authorities" will intensify their efforts to extract the funds needed to meet fiscal obligations. While there will be variations on the theme, the governments' song will be the same: cut what you give, raise what you take. 4. Crime Waves No job + no money + compounding debt = high stress, strained relations, short fuses. In 2011, with the fuse lit, it will be prime time for Crime Time. When people lose everything and they have nothing left to lose, they lose it. Hardship-driven crimes will be committed across the socioeconomic spectrum by legions of the on-the-edge desperate who will do whatever they must to keep a roof over their heads and put food on the table…. 5. Crackdown on Liberty As crime rates rise, so will the voices demanding a crackdown. A national crusade to "Get Tough on Crime" will be waged against the citizenry. And just as in the "War on Terror," where "suspected terrorists" are killed before proven guilty or jailed without trial, in the "War on Crime" everyone is a suspect until proven innocent…. 6. Alternative Energy In laboratories and workshops unnoticed by mainstream analysts, scientific visionaries and entrepreneurs are forging a new physics incorporating principles once thought impossible, working to create devices that liberate more energy than they consume. What are they, and how long will it be before they can be brought to market? Shrewd investors will ignore the "can't be done" skepticism, and examine the newly emerging energy trend opportunities that will come of age in 2011…. 7. Journalism 2.0 Though the trend has been in the making since the dawn of the Internet Revolution, 2011 will mark the year that new methods of news and information distribution will render the 20th century model obsolete. With its unparalleled reach across borders and language barriers, "Journalism 2.0" has the potential to influence and educate citizens in a way that governments and corporate media moguls would never permit. Of the hundreds of trends we have forecast over three decades, few have the possibility of such far-reaching effects…. 8. Cyberwars Just a decade ago, when the digital age was blooming and hackers were looked upon as annoying geeks, we forecast that the intrinsic fragility of the Internet and the vulnerability of the data it carried made it ripe for cyber-crime and cyber-warfare to flourish. In 2010, every major government acknowledged that Cyberwar was a clear and present danger and, in fact, had already begun. The demonstrable effects of Cyberwar and its companion, Cybercrime, are already significant – and will come of age in 2011. Equally disruptive will be the harsh measures taken by global governments to control free access to the web, identify its users, and literally shut down computers that it considers a threat to national security…. 9. Youth of the World Unite University degrees in hand yet out of work, in debt and with no prospects on the horizon, feeling betrayed and angry, forced to live back at home, young adults and 20-somethings are mad as hell, and they're not going to take it anymore. Filled with vigor, rife with passion, but not mature enough to control their impulses, the confrontations they engage in will often escalate disproportionately. Government efforts to exert control and return the youth to quiet complacency will be ham-fisted and ineffectual. The Revolution will be televised … blogged, YouTubed, Twittered and…. 10. End of The World! The closer we get to 2012, the louder the calls will be that the "End is Near!" There have always been sects, at any time in history, that saw signs and portents proving the end of the world was imminent. But 2012 seems to hold a special meaning across a wide segment of "End-time" believers. Among the Armageddonites, the actual end of the world and annihilation of the Earth in 2012 is a matter of certainty. Even the rational and informed that carefully follow the news of never-ending global crises, may sometimes feel the world is in a perilous state. Both streams of thought are leading many to reevaluate their chances for personal survival, be it in heaven or on earth. Regards, Gerald Celente [Editor's Note: The above essay is excerpted from The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.] Wake-Up Call: Top 10 Trends of 2011 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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| James Turk: Pound may beat dollar to hyperinflation Posted: 21 Dec 2010 03:05 PM PST 11p ET Tuesday, December 21, 2010 Dear Friend of GATA and gold: GoldMoney founder, Free Gold Money Report editor, and GATA consultant James Turk writes tonight that Britain may beat the United States to hyperinflation. Turk's commentary is headlined "Serious Problems Ahead for the British Pound" and you can find it at the FGMR Internet site here: http://www.fgmr.com/serious-problems-ahead-for-the-british-pound.html CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Opportunity in the gold coin market Swiss America Trading Corp. alerts GATA supporters to an opportunistic area of the gold coin market. While the gold bullion market has been quite volatile lately and as of November 29 gold has risen only $7 per ounce over the last month, the MS64 $20 gold St. Gaudens coin has risen about 10 percent in the same time. The ratio between the price of these coins and the price of gold is rising. If you'd like to learn more about the ratio and $20 gold coins, Swiss America can e-mail you a three-year study of it as well as other information. Swiss America also can provide a limited number of free copies of "Crashing the Dollar," a book written by Swiss America's president, Craig Smith. For information about the ratio between the $20 gold pieces and the gold price and for a free copy of "Crashing The Dollar," please call Swiss America's Tim Murphy at 1-800-289-2646 X1041 or Fred Goldstein at X1033. Or e-mail them at trmurphy@swissamerica.com and figoldstein@swissamerica.com. Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52 percent NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| Stewart Thompson: Central banks use gold to control markets Posted: 21 Dec 2010 02:46 PM PST 10:54p ET Tuesday, December 21, 2010 Dear Friend of GATA and Gold: In commentary published today at GoldSeek, Stewart Thompson of the Graceland Updates letter emphasizes again that central banks buy and sell gold not to "make money" but rather to control the value of their currencies, moving their currencies up and down as politics seems to require -- that is, to rig currency markets. This point was made four years ago by the British economist Peter Millar in his excellent study, ""The Relevance and Importance of Gold in the World Monetary System," which you can find at GATA's Internet site here: Of course the same point has been made quite often lately by market analyst James G. Rickards of Omnis Inc., who has suggested that the Federal Reserve peg the dollar to a higher gold price through "open market" purchases and sales of gold, rather than through the traditional surrpetitious maneuvering of intermediaries: Thompson writes today: "With quantitative easing effectively dead now as a tool to handle any further worsening of the crisis, the central banks will look to accelerate their gold buy programs to revalue gold higher, and keep it higher. The point of revaluation is to devalue the debt that is owed by the government to its citizen creditors. "There is no possible way on this earth that I am going to stand before you four days before Christmas as gold revaluation gets under way and top-call myself or you out of your gold items. "The central bank buy programs are not about accumulating gold as an asset, as you accumulate it as an asset, an investment. They use gold as a control mechanism, and it takes very little gold to control the entire paper money system. "The central banks have no interest in buying gold cheaply or selling it 'high.' During gold revaluation (now) they want to pay higher and higher prices for gold, to ease their ability to pay their creditors in paper money." Compare the thoughtfulness of Thompson, Millar, and Rickards with the cavalier remarks of supposed analysts like Jon Nadler of Kitco, who insists that central banks have absolutely no interest in the price of gold, and Jeff Christian of CPM Group, who says he has consulted for most central banks and has found that they hardly ever think about gold at all even as they claim to sit on huge gold reserves. Of course the Fed somehow thinks about gold enough to refuse to give GATA access to its records about gold and particularly the records of the Fed's gold swap agreements with foreign banks: Thompson's commentary is headlined "Gold and Dow: Liquidity Flows For 2011" and you can find it at GoldSeek here: http://news.goldseek.com/GoldSeek/1292949285.php CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52% NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| Posted: 21 Dec 2010 02:28 PM PST Greg Blonder submits: Over the last decade, it was hard to lose money on gold. Gold prices, and related precious metal stocks and funds, averaged around 20% a year returns, sailing through the economic downturn. So, naturally, many people are wondering - will this extraordinary run continue, or has gold peaked? Most observers, myself included, agree that fear and speculation are the main drivers behind the rise in gold. Its future prospects are debated ad infinitum, with partisans on every side and in between. A tiny minority of economists and politicians hope to return their country's currency to a "gold standard", despite the very serious flaws and dangers this blast from the past would engender (see comment below). But, what if we took their proposal seriously? After all, their concerns are moving the market. Would this perspective shine light on the future of gold prices? Complete Story »
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| Lefty Rep. Dennis Kucinich starts his own campaign to end the Fed Posted: 21 Dec 2010 01:53 PM PST Kucinich Proposes Landmark Reform of Monetary Policy; Congressional Press Release http://www.kucinich.house.gov/News/DocumentSingle.aspx?DocumentID=217846 As the nation struggles with long-term unemployment at rates not seen in generations, contracted credit, and the hoarding of public dollars by the banks, U.S. Rep. Dennis Kucinich, D-Ohio, today introduced a dramatic new proposal to establish fiscal integrity, reassert congressional sovereignty, and regain control of monetary policy from private banks. The National Emergency Employment Defense Act of 2010 would allow the federal government to directly fund badly-needed infrastructure repairs and fund education systems nationwide by spending money into circulation without increasing the national debt. The bill would end the current practice of fractional reserve lending, whereby the economy depends upon private financial institutions to lend money into circulation. Kucinich stated: "The staggeringly bad employment and economic numbers represent a massive problem which cries out for bold action. Rather than crossing our fingers and hoping that banks will finally lend some of the billions of public dollars they haven't thus far seen fit to lend, we can take action. My bill would replace the Federal Reserve System's dependence on private banks to create credit. In its place, a Monetary Authority under the Treasury Department would directly inject liquidity into the economy by purchasing much-needed public infrastructure repair. Today we have idle capital, millions of able-bodied but unemployed workers, unused equipment, and record low interest rates. These conditions are the best possible time to make a long-term investment in our nation's infrastructure. My bill would do exactly that." See the legislation here: http://kucinich.house.gov/UploadedFiles/NEED_ACT.pdf * * * Excerpts from the legislation. Findings. ... (17) The authority to create money is a sovereign power vested in the Congress under Article I, Section 8 of the Constitution. (18) The enactment of the Federal Reserve Act in 1913 by Congress effectively delegated the sovereign power to create money to the Federal Reserve system and private financial industry. (19) This ceding of constitutional power has contributed materially to a multitude of monetary and financial afflictions, including: (A) growing and unreasonable concentration of wealth; (B) unbridled expansion of national debt, both public and private; (C) excessive reliance on taxation of citizens for raising public revenues; (D) inflation of the currency; (E) drastic increases in the cost of public infrastructure investments; (F) record levels of unemployment and underemployment; and (G) persistent erosion of the ability of Congress to exercise its constitutional responsibilities to provide resources for the general welfare of all the American people. (20) A debt-based monetary system, where money comes into existence primarily through private bank lending, can neither create nor sustain a stable economic environment, but has proven to be a source of chronic financial instability and frequent crisis, as evidenced by the near collapse of the financial system in 2008. (21) Banks pyramided their value by spending money into existence, greatly inflating the value of bank holdings, inflating the value of their asset bases, enticing unknowing investors to participate in financing schemes like the bundling of subprime mortgages, and ultimately bringing undercapitalized banks and the entire financial system to the edge of ruin, creating circumstances where the taxpayers of the United States were called upon to save the banks from their own imprudent money-issuing practices, misspending, and misinvestments. The banks' ability to create money out of nothing ultimately became the taxpayers' liability, and raises a fundamental question about a practice of money creation which threatens the wealth of the American people. (22) Abolishing private money creation can be achieved with minimal disruption to current banking operations, regulation, and supervision. (23) The creation of money by private financial institutions as interest-bearing debts should cease once and for all. (24) Reclaiming the power of the federal government to create money, and to spend or lend money into circulation as needed, eliminates the need to treat money as a federal liability or to pay interest charges on the nation's money supply to financial institutions; it also renders unnecessary the undue influence of private financial institutions over public policy. (25) Under the current Federal Reserve System, the persons responsible for the conduct of United States monetary policy have been unaccountable to the Congress and the nation, have resisted auditing by the General Accounting Office, and have claimed exemptions from some federal statutes, including the Civil Rights Act of 1964, that apply to all agencies of the federal government. (26) The conduct of United States monetary policy by the Board of Governors of the Federal Reserve System, and specifically the failure of board members to safeguard the financial system against wholesale fraud and abuse of citizens, demonstrates the risks of maintaining a system wherein the power to create and regulate money has been delegated to private individuals who are unaccountable to the people of the United States in any way, even through their representatives in Congress. (27) The Board of Governors of the Federal Reserve System has acted unilaterally to create and spend $1.25 trillion for the purpose of acquiring mortgage-backed securities, in disregard for the constitutional requirement that all Federal Government spending originate in the House of Representatives. (28) An examination of the historical record demonstrates that the exercise of control by the United States Government over the money system has provided greater moderation in the supply of money and promoting the general welfare, and has been indispensable in times of national emergency for generating resources required to support public investment, provide for national defense, and promote the general welfare, and is therefore superior to private control over the money system. (29) As our money system is a key pillar in maintaining general economic welfare and as the Federal Reserve System and its private banking partners have consistently failed to promote or preserve the general welfare, it is essential that Congress, in the name of protecting the economic lives of the American people and the long-term security of our nation, reassume the powers and responsibilities granted to it by the Constitution. PURPOSES. The purposes of this Act are as fol1ows: (1) To create a full employment economy as a matter of national economic defense; to provide for public investment in capital infrastructure; to provide for reducing the cost of public investment; to retire public debt; to stabilize the Social Security retirement system; to restore the authority of Congress to create and regulate money; to modernize and provide stability for the monetary system of the United States, and for other public purposes. (2) To abolish the creation of money, or purchasing power, by private persons through lending against deposits, by means of fractional reserve banking, or by any other means. (3) To enable the federal government to invest or lend new money into circulation as authorized by Congress and to provide means for public investment in capital infrastructure. (4) To incorporate the Federal Reserve System into the Executive Branch under the United States Treasury, and to make other provisions for reorganization of the Federal Reserve System. (5) To provide for an orderly transition. (6) To make other provisions necessary to accomplish the purposes of this Act. ... ADVERTISEMENT Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20. Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan power plants in Mongolia." The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies. For the complete press release, please visit: http://prophecyresource.com/news_2010_nov11.php Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going: GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| A Single Trader, JP Morgan, Holds 90% Of LME Copper Posted: 21 Dec 2010 01:43 PM PST
When a week ago we reported that JP Morgan has denied it owned more than 90% of the copper positions on the LME, we suggested that this could very well mean that Blythe Master's firm could just as easily control 89.999% of the copper and still not misrepresent the truth per that non-commital press release. Turns out our unbridled cynicism was spot on as usual. The Wall Street Journal has just reported that in the copper market "a single trader has reported it owns 80% to 90% of the copper sitting in London Metal Exchange warehouses, equal to about half of the world's exchange-registered copper stockpile and worth about $3 billion." Oh and yes, while JP Morgan technically is not singled out, we will be delighted to issue a retraction the second JP Morgan approaches us with a refutation that it is not the trader in question. And while we are at it, we also will repeat our claim that it was indeed JP Morgan that reduced its massive silver position, as per the recent FT article: as above we will immediately issue a retraction and apologize should JPM's legal department contact us that we are wrong on this. Somehow we don't think that will be an issue. And so it is once again made clear that the biggest market manipulating cartel in the world is not only JPM's commodity trading operation, but the "regulators" at the CFTC, who are doing all they can do to delay implementing rules on position limit- a stalling tactic whose sole purpose is to make the life of Jamie Dimon as comfortable as possible while he corners the copper market (and offloads his PM shorts to some "foreign bank"), even if that means the complete collapse in faith in the commodity market. Presumably, this means that Mr. Gensler has received an outsized Christmas gift to assuage his conscience. As for the commodity market, well, just look at what has happened to the stock market now that everyone knows it is nothing but a house of cards scam where a few robots front run each other. We are confident to quite confident tomorrow's ICI report will confirm that 33rd consecutive outflow from domestic equity funds. It is a pity that the same fate will now happen to the commodities market, as everyone tells Gensler to shove his corrupt market, and moves to physical. Frankly, it couldn't happen to a nicer group of so-called regulators. From the WSJ:
Please keep the bolded text in mind, as you read the following description of the idiocy spewed on TV tonight, via the Street:
In other words: per Cramer, the story broken by the WSJ is just fabulation and JPM's 90% lock of the copper market is as indication of proper supply/demand dynamics. Because, in some parallel universe, JP Morgan controlling 90% of the market is real demand... You read that right. And this person is on TV, advising lemmings how to throw their money into a ponzi which nobody even pretends to hide. That said, we are not worried about Cramer: following the next market crash, which is coming, after his termination from what is left of CNBC, he will make millions selling his latest book written in second grade friendly-English, titled "This time, I promise, it is different." With a subtitle:" Trust me - I was on TV...in spite of my atrocious Nielsens rating."
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| 'Career Average' to Replace Final Salary? Posted: 21 Dec 2010 01:36 PM PST
The BBC reports, Public pension schemes 'should be career average':
I'm not going to debate the pros & cons of final salary versus career average pension schemes, but it's obvious that policymakers in Britain are looking to make cuts to pensions and this, along with the switch to CPI, are all part of the measures they're introducing now. The US is also taking note as many states are struggling to cope with their own ballooning pension costs. CBS's 60 Minutes had a segment on the municipal bond market this past Sunday which took a close look at the financial mess plaguing many states (see videos below or click here). Will a collapse in the municipal bond market be the next major hurdle? Who knows? But I can guarantee you the Fed and the US government will do whatever it takes to avoid any collapse of the municipal bond market. In the meantime, pension reforms will continue around the world, and many policymakers will be looking at Britain to see how their reforms are working out and whether they can bolster their pension system now that the day of reckoning has arrived.
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| Minefinders: The Best of Both (Gold and Silver) Worlds Posted: 21 Dec 2010 01:05 PM PST Minefinders (AMEX:MFN)[TSE:MFL] is headquartered in Vancouver but all of its mines are located in Northern Mexico. It has very unique attributes, notably the hybrid nature of its mineral reserves (approximately 50/50 gold to silver).
Complete Story »
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| Commodity market concentration starts to worry even Wall Street Journal Posted: 21 Dec 2010 12:39 PM PST Trader Holds $3 Billion of Copper in London By Tatyana Shumsky and Carolyn Cui http://online.wsj.com/article/SB1000142405274870411850457603408343693141... As commodity prices soar to new records, the ability of a few traders to hold huge swaths of the world's stockpiles is coming under scrutiny. The latest example is in the copper market, where a single trader has reported it owns 80% to 90% of the copper sitting in London Metal Exchange warehouses, equal to about half of the world's exchange-registered copper stockpile and worth about $3 billion. The report coincided with copper prices soaring to new records on Tuesday. Commodities prices rallied along with stocks. The Dow Jones Industrial Average gained 55.03 points, or 0.48%, to 11533.16, its highest level since August 2008. Crude oil jumped to its highest level in more than two years and topped $90 a barrel in late electronic trading in New York. Corn and soybeans rose amid worries about hot weather in Argentina. Copper soared to a new record of $4.2705 per pound on Tuesday in New York, and is up 28.3% this year. The LME's three-month copper contract closed at $9,353.50 a metric ton, up 1.6% on the day, a new record. ... Dispatch continues below ... ADVERTISEMENT Opportunity in the gold coin market Swiss America Trading Corp. alerts GATA supporters to an opportunistic area of the gold coin market. While the gold bullion market has been quite volatile lately and as of November 29 gold has risen only $7 per ounce over the last month, the MS64 $20 gold St. Gaudens coin has risen about 10 percent in the same time. The ratio between the price of these coins and the price of gold is rising. If you'd like to learn more about the ratio and $20 gold coins, Swiss America can e-mail you a three-year study of it as well as other information. Swiss America also can provide a limited number of free copies of "Crashing the Dollar," a book written by Swiss America's president, Craig Smith. For information about the ratio between the $20 gold pieces and the gold price and for a free copy of "Crashing The Dollar," please call Swiss America's Tim Murphy at 1-800-289-2646 X1041 or Fred Goldstein at X1033. Or e-mail them at trmurphy@swissamerica.com and figoldstein@swissamerica.com. J.P. Morgan Chase & Co. recently had a large position in copper, though it is unclear whether the U.S. bank increased its holdings, or whether a new player has taken dominant position. "Regardless of who owns it, the only thing of note here is that we are being told that one person has a substantial position," said David Threlkeld, president of Resolved Inc., a metals consultancy. Single traders also own large holdings of other metals. One trader holds as much as 90% of the exchange's aluminum stocks. In the nickel, zinc and aluminum alloy markets, single traders own between 50% to 80% of those metals and one firm has 40% to 50% of the LME's tin stockpiles. While commodities exchanges scrutinize all holdings to ensure a single player isn't trying to corner the market, and many of the positions are owned by big firms on behalf of clients, the large holdings do result in a concentration of ownership that could skew prices. At the same time, thousands of new investors are flooding into the commodities markets, either directly or through exchange-traded funds, seeking to take advantage of an expected rise in prices of raw materials as the global economy continues to recover. While commodities regulators in the U.S. are considering restricting the amount of futures contracts any one trader can hold, they have no jurisdiction over physical holdings. The LME has strict rules to prevent market squeezes but does not limit how much metal a single trader may hold. Instead, the exchange demands the dominant holder make metal available for short-term periods at very limited profit margins. The LME says it closely watches individual holdings. Copper demand is likely to outstrip supply this year by an estimated 455,000 metric tons, says Barclays Capital. Copper inventories at the LME have been declining since February. Consumption is growing rapidly in China, Brazil, and the U.S. And the creation of ETFs to hold physical metal is helping drive demand. On Tuesday, ETF Securities, a London-based provider, said that its newly-announced copper-backed ETF has added about 850.5 tons of copper, up 43%, to reach 1,445.5 tons. Last month, the LME reported that a single holder owned more than 50% of the exchange's copper. People familiar with the matter at the time said J.P. Morgan was the holder. On Tuesday, the LME reported that a single holder now has as much as 90% of the stockpiles, without naming the firm. The LME reports data two days in arrears, so the position increased on Friday. In the aluminum market, about 70% of the LME metal is locked up, MF Global base metals analyst Edward Meir said during LME Week in London in October. LME aluminum stocks currently total around 4.3 million metric tons. As one example, Swiss commodity trading firm Glencore International AG bought about 1.6 million tons of the metal from United Co. Rusal Ltd. earlier this year, market participants said at the time. Glencore then turned around and presold the metal. So even though the aluminum is sitting in LME warehouses, visible to all traders, it is effectively locked up. These sorts of deals have skewed physical trading in these metals, as other consumers have paid increasing premiums to get hold of stocks, even though the metal looked like it was available in warehouses. Holding ready-for-delivery metals on an exchange isn't a cheap undertaking for traders, who are responsible for paying insurance, storage and financing costs. And "the end game is to find somebody to buy something you have already bought for a higher price," Mr. Threkeld said. The recent boom in metal prices has enabled traders to purchase the physical metal, sell a futures contract at a much higher price and still make a profit after paying for storage and insurance. Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52 percent NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| A Global Glut of Deepwater Oil…With One Major Exception Posted: 21 Dec 2010 12:00 PM PST It's boom time for offshore drilling. Not in the US, of course, but that shouldn't come as any surprise. After all, there are few "enemies" Congress pursues with more gusto than that of conspicuous productivity. Almost three weeks have past since President Barack Obama passed a 7-year moratorium on drilling for oil and natural gas within 125 miles of the Florida coast. And still, unremarkably, the industry soldiers on…elsewhere. Indeed, production from deepwater drilling, having doubled over the past five years to some five million barrels per day, continues to capture a larger piece of the total global supply pie. Thanks mostly to new discoveries and ongoing investment in exploration and development in Brazil and West Africa, that figure is projected to double by 2020, when contributions from the deep will make up more than 10% of total global production. Of the deepwater discoveries made during the past decade, Brazil boasts 7 of the top ten, as measured by volume. At very best estimates, fields Tupi (2006), Jupiter (2008), Franco (2010), Lara (2008), Jubarte (2001), Mexilhao (2001) and the newly discovered Libra deposit (2010), could contain up to 40 billion barrels of oil equivalent – about half the size of Saudi's elephant Ghawar Field. That may sound like a bit of a stretch and, to be fair, many of these discoveries are relatively fresh and estimates can vary quite a bit on the size of the deposits. Moreover, governments with total or majority control over their national reserves tend, as governments do, to err on the side of optimism when evaluating the size of their own fields. But that's probably as true for Saudi and Russia, say, as it is for Brazil and the West African nations. Overestimating the size of one's endowment is nothing new, after all. Nevertheless, even if only one third of Brazil's recently discovered deepwater deposits end up in the "recoverable" basket, that still puts the total reserves more or less on par with Alaska's Prudhoe Bay giant…a field discovered more than four decades ago which is laboring under an 11% annual decline rate. And the South American field leader is showing no signs of slowing down, either. Given its recent spate of discoveries, it should come as little surprise that Brazil is doubling down on its deepwater bet, a tactic seen in sharper relief when compared to the post BP blowout response by the US. "The Department of Interior (DOI) is pretty much squashing offshore development in the name of safety," Byron King, our resident oil man noted in yesterday's 5-Minute Forecast. "'No more blowouts' is a nice slogan, but it seems that the DOI wants to achieve that worthy goal by just shutting down offshore development for all purposes. "Since June," continued Byron, "the DOI has approved less than one new offshore drilling permit per week – and only in shallow waters, less than 500 feet depth. Almost NONE of the permits are for exploration wells, with the few approvals being for developmental drilling in known areas. "It's a recipe for falling future output and eventual energy shortages in the US," concluded Byron, to which 5 editor Dave Gonigam astutely added, "And it stands in stark contrast to what other governments are doing." Indeed. Already South America's largest economy, Brazil hopes to increase its deepwater production from 1.4 million barrels per day, as measured in 2009, to 3.5 million by 2020. Deepwater production in the US, by comparison, looks set to remain stable at 1.2 million barrels per day…after having only increased from 1 million barrels per day since 2000. Elsewhere, too, nations unable to afford the luxury of environmental hysteria are taking advantage of the political fallout in the US to advance their own deepwater programs. Where the Gulf of Mexico remains paralyzed, the Gulf of Guinea, for example, flourishes with exploration activity. Reports The Wall Street Journal: "Tullow [Oil PLC] in July announced a significant discovery off Ghana after drilling in 4,685 feet of water. A nearby field, estimated to contain up to 1.5 billion barrels of oil, is scheduled for first production in December. "Chevron, meanwhile, announced the acquisition of three large deep-water exploration blocks in Liberia. It plans to begin drilling there this year. The company also bought deep-water acreage in the Turkish Black Sea and in China." With the BP disaster still fresh in the minds of many Americans, the Obama administration has obviously decided it cannot afford the political cost of more deepwater drilling. The Brazilians and West Africans, however, seem to have decided they cannot afford not to drill. Joel Bowman A Global Glut of Deepwater Oil…With One Major Exception 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: 21 Dec 2010 11:55 AM PST My Dear Friends, I am physically back in the US. I am sure the rest of me will catch up soon. This is what 19 hours of traveling can do to you. The flight from Joberg went through Dakar and was 19 hours from start to finish. That is the last time I do that. From now on it is Joberg to Dubai to JFK. That is much more civilized. Regards,
Jim Sinclair's Commentary The Green Hornet says "The only way public pensions are going to remain functional is by government bailouts or QE to infinity." I cannot disagree with that at all. It further influences me to say that all of this is coming to a head very soon. Gold will trade at $1650 and beyond soon. 2011: The Year Public Pension Plans Get Whacked The traditional defined-benefit pension that is the dominant retirement plan for public-sector employees officially has a huge target on its back. And 2011 is shaping up as the year politicians begin to take serious aim at cutting promised benefits. What was a mere trickle of states and municipalities starting to address massive unfunded pension liabilities in 2010, which are now estimated to total more than $1 trillion, looks to grow to a torrent in 2011. New Jersey Governor Chris Christie may be the most voluble agitator for pension cutbacks, but he's got plenty of company across the country. Here's what some other states and cities are considering: Virginia. Governor Bob McDonnell recently proposed that Virginia's public employees be required to chip in 5 percent of their pay to the state's pension fund. Virginia stopped requiring public employee pension contributions in 1983. Houston. Mayor Annise Parker has started the "conversation" by deeming the city's three major pension plans covering Houston's police, firefighters, and municipal employees unsustainable. "There's a difference between a fair pension and a gold-plated pension, and the citizens of Houston have to know that we can find a fair balance in there," Mayor Parker told the Houston Chronicle. Maryland. A proposal released yesterday by a state pension commission would increase the years of service for workers to qualify for Maryland public retirement benefits. Employees would need 15 years on the job (up from the current 5) to qualify for retiree health benefits, and the vesting period for the state's pension plan would increase from its current five years to 10 years. The commission also wants to shift half of teacher pension costs from the state to local counties.
Jim Sinclair's Commentary Here is another clear and present danger that must result in QE to infinity. There is no way out. The revenues of states have but one way to go, and that is DOWN. The expenses of states cannot be practically reduced to meet any equilibrium with the drop in revenue. States will have to be bailed out, and that means QE to infinity. That means gold will trade at $1650 and better.
Jim Sinclair's Commentary There is no practical solution to the gathering economic and social clouds other than QE to infinity. Gold will therefore trade at $1650 and higher. Wave of Muni Defaults to Spur Layoffs, Social Unrest: Whitney A wave of defaults by state and local governments in the coming months will spark a selloff in the municipal bond market, hurting US economic growth and stocks and causing social unrest as governments are forced to lay off workers and cut back on services, well known financial analyst Meredith Whitney told CNBC Tuesday. Responding to the uproar over her "60 Minutes" interview broadcast on CBS Sunday night, Whitney defended her prediction that at least 50 to 100 cities and towns could default on their debt as states and the federal government cut back on financial support. Muni experts, including an analyst from Standard & Poor's, dismissed her predictions, saying the numbers don't add up. "I appreciate that the reaction is so violent," she said in a live interview with CNBC. "I didn't put the debt on these states. We're looking at the numbers. This is how it plays out." The big problem is that cash-strapped states will no longer be able to provide the financial support to municipalities as they have in the past, said Whitney, who is CEO and founder of Meredith Whitney Advisory Group.
Gold looks poised to move higher Following a period of volatility and year-end position-squaring, gold looks set to move higher, and may have a good shot at hitting the US$1,525 an ounce level. For many years now, the gold bull has been moving in very dependable Elliott Wave and Fibonacci patterns. But every once in a while, the outlook becomes a little less clear. In recent weeks, for example, as we approach the end of 2010, we have seen a lot of price volatility as position squaring and year-end machinations hold sway. But having said that, it does look like gold should be poised to rise in the short term, and I'm looking for a completion to a 5 wave rally that began from about $1,040 per ounce in February of this year. During the past couple of months, I see a clear Fibonacci trading day relationship on Gold's swings from pivot highs to pivot lows. 8 days of correction, 13 days of rally, 8 days of correction is the recent pattern over the past 5 weeks or so. Below is a chart outlining these crowd behavioral based patterns that I rely on for both my trading service and market forecasting services. You can see the clear relationships, confirmed by the stochastics indicators at the tops and bottoms as well:
Jim Sinclair's Commentary When confidence in the dollar collapses it is exactly like the event herein depicted.
Jim Sinclair's Commentary Here is where the bad stuff hits the fan. The accounting firm opined on the OTC derivatives. That subject cannot stand the light of day a criminal investigation is sure to put on it. N.Y.'s Cuomo Sues Lehman Accounting Firm Ernst & Young New York Attorney General Andrew Cuomo sued Ernst & Young LLP, accusing the firm of facilitating a "major accounting fraud" by helping Lehman Brothers Holdings Inc. deceive the public about its financial condition. For more than seven years before Lehman declared bankruptcy in 2008, the investment bank engaged in transactions approved by Ernst & Young whose purpose was to move debt off its balance sheet and make it appear less leveraged, Cuomo said in a statement. This was done through what are known as "Repo 105" transactions. "This practice was a house-of-cards business model designed to hide billions in liabilities in the years before Lehman collapsed," Cuomo said today in one of his last cases as attorney general. "Just as troubling, a global accounting firm, tasked with auditing Lehman's financial statements, helped hide this crucial information from the investing public." The state seeks to recover fees collected by Ernst & Young for work performed for Lehman between 2001 and 2008, which exceed $150 million, and investor damages and equitable relief, Cuomo said. He will be sworn in as New York governor on Jan. 1. His successor will be New York Democratic state Senator Eric T. Schneiderman. Charles Perkins, a spokesman for Ernst & Young, didn't immediately respond to a call and e-mail seeking comment.
Jim Sinclair's Commentary You have to know this is all coming to a head very soon. Those that heaped criticism on Bernanke are now at the door of the Fed with their Begging Bowls. The Fed created the money in the first place with QE to infinity. Fed extends USD swaps with major central banks FRANKFURT (Reuters) – The world's major central banks said on Tuesday they would extend emergency supplies of U.S. dollar funding to money markets, in a sign that authorities remain concerned about financial instability as governments grapple with debt problems. The European Central Bank, the Bank of Japan, Bank of Canada, the Bank of England and the Swiss National Bank extended their U.S. dollar liquidity providing operations with the U.S. Federal Reserve until August 1, an indication they view the money markets as still fragile. The swap lines, which had been due to expire next month, were established to ease strains in short-term money markets by ensuring banks do not have trouble obtaining dollars, although banks have used the lines relatively little since the middle of this year. The Fed's policy-setting panel opened swap lines, first with the ECB and the SNB in December 2007 and later with other central banks, including those of Sweden, Mexico and Brazil. These lines were discontinued in January this year because market conditions had improved, but in May the central banks decided to reopen the operations after the sovereign debt crisis ignited. Now they have been extended again.
Jim Sinclair's Commentary How is this situation going to be rectified? The simple answer is that it won't be fixed in any manner. It will be papered over by the Fed buying new State debt, a classic form of QE. $2tn debt crisis threatens to bring down 100 US cities More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned. Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery. "Next to housing this is the single most important issue in the US and certainly the biggest threat to the US economy," Whitney told the CBS 60 Minutes programme on Sunday night. "There's not a doubt on my mind that you will see a spate of municipal bond defaults. You can see fifty to a hundred sizeable defaults – more. This will amount to hundreds of billions of dollars' worth of defaults." New Jersey governor Chris Christie summarised the problem succinctly: "We spent too much on everything. We spent money we didn't have. We borrowed money just crazily. The credit card's maxed out, and it's over. We now have to get to the business of climbing out of the hole. We've been digging it for a decade or more. We've got to climb now, and a climb is harder."
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| Printing Money Not Actually in Bernanke’s Bag of Tricks Posted: 21 Dec 2010 11:00 AM PST Mr. Ben Bernanke. Mythbuster! "One myth that's out there," he told 60 Minutes, "is that what we're doing is printing money." Ha. Ha. Ha. Can you imagine anything so laughable? So ridiculous? So absurd? And to think that even we, at The Daily Reckoning, believed it. How could we be so credulous? Of course, the Fed is not printing up money. How could we have been so naïve? The days of printing up money are long gone. Now, the Fed doesn't do anything of the sort. Instead, it merely buys US government debt from banks. That's not printing money. Nope. Not at all. Not even close. But wait. How does it pay for the bills, notes and bonds it buys? Oh, well, it certainly doesn't print up money. Instead, it merely credits the banks with the money…electronically. No printing involved. The banks then have money that didn't exist before. The banks are supposed to lend it out. For every dollar they get from the Fed they can lend out 10. That's how it works. So, IF anyone wanted to borrow the money, and IF the Fed had bought, say, $1 trillion worth of US government debt, the banks COULD lend ten times that amount…thus increasing the supply of money in circulation by $10 trillion. Does that sound like printing money to you? Nah… Of course not. Does it sound like it might cause inflation? Well, yes… It would be rather surprising if it didn't. Consumer price inflation is now running at about 1% per year. Why so low? Because, so far, the banks aren't lending. The Fed adds money to the system. But it doesn't get passed along. Why not? Because we're in a Great Correction. The economy is saturated with debt. People are trying to dry out. And no matter how many times the Fed offers them a drink; they're still on the wagon. Of course, if the economy were to go on a binge again, the banks would lend, people would borrow, and all that money the Fed didn't print would suddenly come out of hiding. Consumer prices would go up. Hyperinflation could come quickly. Then what would Mr. Bernanke do? He says he would raise interest rates immediately, should the CPI hit 2%. Well, dear reader, do you believe him? We do. At least as much as we believe he's not printing money. Regards, Bill Bonner Printing Money Not Actually in Bernanke's Bag of Tricks 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: 21 Dec 2010 10:15 AM PST Gold edges higher in holiday-thinned trading The COMEX February gold futures contract closed up $2.70 Tuesday at $1388.80, trading between $1381.40 and $1393.00 December 21, p.m. excerpts: see full news, 24-hr newswire…
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| IMF completes gold sales program Posted: 21 Dec 2010 10:13 AM PST From Reuters http://af.reuters.com/article/metalsNews/idAFN2127057720101221 WASHINGTON -- The International Monetary Fund said on Tuesday it had concluded the sale of 403.3 tonnes of gold under a program approved in September 2009 to help boost its lending resources. All gold sales were at market prices, including direct sales to official holders, the IMF said in a statement. The gold sales amounted to one-eighth of the IMF's total gold reserves. The fund sold 200 tonnes to India's central bank last year. Other buyers have included Bangladesh, Sri Lanka and Mauritius. The IMF said on Nov. 29 it told 19.5 tonnes of gold in October but it has not yet provided details of sales in November or December. ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf Join GATA here: Yukon Mining Investment e-Conference http://theyukonroom.com/yukon-eblast-static.html Vancouver Resource Investment Conference http://cambridgehouse3.com/conference-details/vancouver-resource-investment-conference-2011/15 Cheviot Asset Management Sound Money Conference Phoenix Investment Conference and Silver Summit Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Prophecy Drills 71.17 Metres of 0.52% NiEq Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: http://prophecyresource.com/news_2010_nov29.php
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| LGMR: Gold 2011 Forecast at $1500, $1600 or "Outrageous" $1800 on Euro Crisis Posted: 21 Dec 2010 10:02 AM PST London Gold Market Report from Adrian Ash BullionVault 21 Dec., 08:15 EST Gold 2011 Forecast at $1500, $1600 or "Outrageous" $1800 on Euro Crisis, US-China Currency War THE PRICE OF GOLD in professional wholesale dealing touched a 4-session high early Tuesday at $1390 per ounce, rising for Euro and UK investors as world stock markets hit new two-year highs. Platinum prices rose to $1715 the ounce at today's London Fix, gaining some 14.6% higher from New Year 2010. Slipping back from $29.50 an ounce on Tuesday, the silver price stood more than 74% higher from the start of the year. "Trading has been very thin so far," says a London dealer in a note, likening Tuesday's volumes to "the late days of summer." Noting strong inflows into newly-launched US precious-metal and platinum trust funds, recent demand is "demonstrating bullishness across the entire complex," says a London analyst, "indicating wider interest." On the political front today, North Korea said it wou...
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| Posted: 21 Dec 2010 10:00 AM PST Apparently, late last night, from out of the spooky darkness, there was a sound that woke up my wife, and so she woke me up, wanting me to get up and go see what it was, which I figured would probably end up with me confronting some desperate, drug-crazed burglar who will pull out a knife and stab me over and over. So I said, "Wait! I have a better plan! I'll just load up some of these guns with these new, armor-piercing bullets and shoot right through the walls – Blam! Blam! Blam! – thus easily and conveniently 'taking out' the intruders from the warm comfort of our own bed!" Her hasty veto of my plan made me suspicious. "Aha!" I gloated. "You just want me to get killed! Is that it? You want me dead?" My vague suspicions of her treachery were starkly confirmed when she snapped back to me, "Why do you always ask that? At least, with you dead, I wouldn't have to listen to you always being crazy about the Federal Reserve creating so much excess money that the economy will be destroyed by inflation!" With a growing heat went on, "And I won't have to listen to your constant whining about how the Fed is financially and economically killing us with inflation in prices by creating too much money and credit, either!" Before I could gather my wits to respond, she continued, "And I won't have to sit through any more of your constant hysterics that the Fed is willing to destroy us with inflation so that the loathsome Obama administration can deficit-spend us into more un-payable debt, farther and farther, and faster and faster, deeper and deeper into some allegorical cold, dark, dangerous, uncharted depths of crushing oceans of federal debt that already approaches 100% of GDP in terms of cash flow, and which terrifyingly exceeds 5,000% of GDP in terms of accrued liabilities!" Then, her voice rising to a crescendo, she leaned towards me and yelled right in my face, "And you snore, too, making it all worse!" Then she lay back on her pillow with a smug grin on her face, finishing with, "So that would be nice for a change!" Sheepishly, I had to admit that she had a valid point, as someone snoring in your ear all night, every night, is probably the only thing scarier than the ruinous, catastrophic, hellish inflation in consumer prices that will result from the Fed creating so terrifyingly much money, sometimes referred to as "so horribly unbelievably much money," or "so insanely, catastrophically much money," depending on my mood. And this does not even consider the economic nightmare beyond the nightmare of inflation, which is that the new money will be used to buy trillions of dollars' worth of government debt so that the incompetent, over-taxing, over-regulating, suffocating monstrosity that has become the federal government, along with a poisonous, nasty, incestuous spider-web of local and state governments and regulators, can spend it, literally trying to fatten up their tragic citizen victims before the government predators sink their fangs into the businesses and the people, gradually sucking out the life juices – sluuuuuurrrrp! – of the people and the economy so that government spending is now fully half of GDP, and yet borrowing more money to finance spending more money to create more parasites addicted to more government spending, each with their own sets of fangs and perpetually ravenous hungers. Gaahhhhh! We're freaking doomed, and this nightmarish spider thing is really creeping me out, too! Looking for a way to distill all this economics down to something pithy and brief, and that does not involve spiders, so as to make my wife more easily understand the situation, I finally settled on "Shut up!" by way of explanation as to why the inflation in consumer prices that Ben Bernanke and his Federal Reserve are unleashing will destroy us and everything we love, including truth, justice and the American way, and there is nothing that anybody can do about it, including Superman, the government, her loud mouth, me, or some stupid burglar. Undeterred, she persisted that I get up and personally root out any burglars, along with any other intruders, murderers, rapists, kidnappers, escaped mental patients, FBI agents, ghosts, vampires, the undead, space monsters or their pods hiding in our house. When I protested, she taunted me, "What a wuss! Look at the bravery of Ron Paul taking over the chairmanship of the Monetary Policy Subcommittee that oversees the Federal Reserve! He knows that he is a marked man due to his long-professed desire to audit the corrupt Federal Reserve and the despicable banking system, especially since doing so would surely expose decades of slimy governmental corruptions, coercions, extortions, back-stabbing treacheries, poisonous treasons and lies, not to mention outright thefts, frauds and murders!" She smiled condescendingly as she said, "And yet you are such a Big Mogambo Baby (BMB) that you are too scared to even go see if there is one teeny, tiny burglar? Ron Paul would laugh at you, Big Mogambo Baby (BMB)! Hahaha! Big Mogambo Baby! Baby, baby, baby! Hahaha!" Of course, I failed to see either the humor or the connection between, on the one hand, the bravery of Ron Paul, heroically proposing to expose a century's worth of heinous criminalities of earthshaking, confidence-shattering consequence by the Federal Reserve, and, on the other hand, my cowardice, especially since the whole point would have been perfectly moot if I had been allowed to install a carefully-placed series of Claymore mines in the living room as per my original Super Mogambo Plan of Defense (SMPOD), instead of having it all being overruled at the last second by her "typical female" crap about how "a house is not an explosive death trap for intruders," which is something that I certainly had never heard before, and she got all huffy when I politely asked, "And just where in the hell is THAT written? In the Book of Stupid?" Well, we were soon yelling back and forth about who is really the stupid one around here, and any burglar was, by then, long gone. However, Ben Bernanke remains, and the tragedy of our national fate remains because the history of the last 4,500 years of governments and people over-borrowing remains, and the historically-consistent tragic fate of countries abusing a fiat currency remains, and the only thing remaining to do is to accumulate as much gold and silver as you can with your remaining money. And the best part is that buying gold and silver is so obvious, and so easy, that you laugh in merriment, "Whee! This investing stuff is easy!" The Mogambo Guru Money Creation Home Invasion 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: 21 Dec 2010 09:06 AM PST Press Release No. 10/509
The International Monetary Fund (IMF) announced today the conclusion of the limited sales program covering 403.3 metric tons of gold that was approved by the Executive Board in September 2009 (see Press Release No. 09/310). These sales are a central element of the new income model for the IMF that was endorsed by the Executive Board in April 2008. They will also increase the Fund's capacity to support low-income countries under a strategy endorsed by the Board in July 2009 (Press Releases No. 08/74 and No. 09/268). The gold sales were conducted under modalities to safeguard against disruption of the gold market. All gold sales were at market prices, including direct sales to official holders. - – - RS View: Gold now poised to enter the New Year with no official headwinds. And while the U.S. Treasury's valuation of U.S. gold reserves at $42.22/oz might surely qualify as an official sort of obfuscation, it certainly stands alone and askance offering no meaningful impediment to an escalation of prices in the free market for physical gold both here and abroad.
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| All the Gold Price Needs To Do Is Not Drop, That Shows it's Planning Another Advance Posted: 21 Dec 2010 09:00 AM PST Gold Price Close Today : 1388.20 Change : 2.70 or 0.2% Silver Price Close Today : 29.376 Change : 0.041 cents or 0.1% Gold Silver Ratio Today : 47.26 Change : 0.026 or 0.1% Silver Gold Ratio Today : 0.02116 Change : -0.000012 or -0.1% Platinum Price Close Today : 1723.60 Change : 12.70 or 0.7% Palladium Price Close Today : 754.50 Change : 12.50 or 1.7% S&P 500 : 1,254.60 Change : 7.52 or 0.6% Dow In GOLD$ : $171.74 Change : $ 0.50 or 0.3% Dow in GOLD oz : 8.308 Change : 0.024 or 0.3% Dow in SILVER oz : 392.60 Change : 1.87 or 0.5% Dow Industrial : 11,533.16 Change : 55.03 or 0.5% US Dollar Index : 80.69 Change : 0.064 or 0.1% The GOLD PRICE really wasn't stirring itself up to do much of anything today, snoozing ahead of the Christmas holidays. It couldn't pierce that roughly $1,388 resistance, but it did bolt one time today to $1,392, right on the open, then just as speedily was slapped winded, plumb to $1,381.50 in about 10 minutes. Comex closed at $1,388.20, up $2.70. In the aftermarket it edged down about $3. This doesn't inspire cheering celebrations in the street, but it is adequate for gold. Yes, all it needs to do right now is not drop, and that shows it is correcting sideways and planning another advance. Gold must remain above $1,360, and overhead must clear resistance at $1,392 and $1,406. I don't expect much to happen between now and St. John's Day (Monday, 27 Dec). Unless the natives on the trading floor get restless the week after Christmas and want to scalp some easy profits by running the market up and then down, next week promises quiet as well. The SILVER PRICE is treading water like gold. Now, since last Thursday it has established an uptrend (higher lows) but has also stalled at 2950c. Today it traded range-bound between 2940c and 2920c, with the exception of a very brief high spike to 2955c and a very brief low spike to 2905c. This suffices. 'Tis enough, for the time being, for silver merely to avoid stumbling, and to rest for another footrace. It merely needs to avoid closing below 2920c. If it clears 2955c it will run again at the 3000c door. I continue to expect that silver and gold have one more rally leg up that will top by end-January. Yes, keep on accumulating silver and gold. GOLD/SILVER RATIO today gave us no opening to execute swaps out of US 90% silver coin into gold, but I expect that ratio will drop when the rally starts and give us the chance to execute the swaps at a little lower rate. That takes the sting out of the large discount on US 90% right now. For those of y'all who believe in Santa Claus, the stock market broke to a slight new high today. The Dow added 55.03 to end at 11,533.16. S&P500 gained 7.52 and ended 1,254.60. The Dow has drawn out what is either an ascending wedge, building for a downside break out, or a flat-topped triangle, which breaks out upside. I don't know which way it will break out, but will tire y'all out by re-iterating how little I trust stocks, since (1) they are locked in a bear market for at least another 3 years, and (2) there is no economic reason to justify buying them since the depression is far from over. But if y'all just want to watch your money evaporate, go ahead and buy 'em. The US DOLLAR INDEX underwent a tough day. It pushed against 80.40 resistance and dropped as low as 80.243. Every time it tried to climb to its knees, somebody knocked it down again, but with one foot on an 80.243 low and one on an 80.28 low, the buck roused itself, grabbed the ladder, and climbed rung by rugn to 80.823. End of the day found it at 80.692, up only 6.4 basis points, but clearly that little increase doesn't reflect the dollar's resilience today. Yes, it's still scrofulous, but it is rallying. For the nonce. EURO closed below its 200 day moving average today, greatly increasing the pull of gravity. During the Twelve Days of Christmas (Christmas thru Epiphany, 6 Jan) our office will be working only four hours a day. Please be patient, leave a voice mail or send us an email at helpdesk@the-moneychanger.com Thanks for your understanding. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com Phone: (888) 218-9226 or (931) 766-6066 © 2010, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. 
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| The Wonderful World of Charles Fabrikant Posted: 21 Dec 2010 08:57 AM PST A little nugget every investor learns eventually: Talented people create wealth. And talent is an asset that never really goes into a bear market. It's always valuable…as the long-term investment performance of SEACOR Holdings (NYSE:CKH, $104.30) demonstrates very clearly. A couple of months ago, when CKH was trading in the mid-$80s, I recommended the stock to the subscribers of Capital & Crisis. My reasoning was very simple: SEACOR Holdings is a great company that's run by a very talented investor…and its stock was quite cheap. The stock isn't as cheap anymore (it is up about 45% since my recommendation, after taking into account the special $15 dividend), but SEACOR is still a great company that's still run by a very talented investor. His name is Charles Fabrikant and he has compounded capital at a 15% clip since 1992. The S&P 500, by contrast, has delivered 5.6%. He also pens as good as an annual letter as one will find on either side of the Mississippi. But let's start at the beginning, about 20 years ago. Fabrikant was one of a group of investors looking to buy a shipping business. They took over NICOR Marine and adopted the name SEACOR "primarily because it was less costly to paint over two letters than the entire name," Fabrikant writes. SEACOR soon spread into a variety of businesses out of "a conviction that if opportunity knocks, we should open the door." Today SEACOR owns and operates barges, tankers, work boats and helicopters. About half of the business is the legacy offshore marine services business. This division mainly serves the offshore oil and gas industry. The other businesses do all kinds of things. SEACOR's helicopters work in oil and gas, medical emergencies, firefighting and much more. Its cargo ships support US inland waterways. Its boats also work in environmental cleanups, such as the mess in the Gulf of Mexico. These are a few of SEACOR's profitable hobbies. What SEACOR really is, though, is an opportunistic asset manager. Fabrikant says SEACOR "is not just a boat company or an energy service company. Our asset base is diverse and our horizon is broader than simply owning and operating equipment. We are a custodian of capital, and our mission is to use our expertise and knowledge to make money." In short, SEACOR is a "go anywhere" investor. Just in the last handful of years, SEACOR has established ventures in Argentina to operate barges and ships, in Brazil to operate helicopters and in China to sell business jets and helicopters. Fabrikant is also adamant about having a diverse collection of businesses. "I realize that some investors may not like mixed drinks," he writes, "but this philosophy of diversity is core to our business strategy." It's served SEACOR well. It has never – not even once – reported a loss for any year in its history. Fabrikant also lays out many wise nuggets in his letters. I wish more corporate executives thought like he does – and were also owners of the enterprises they manage. "Capital, like assets, needs to be deployed and priced to replacement cost." Fabrikant deals in tangible assets and thinks in terms of "replacement cost." This kind of analysis asks, "What does it cost to build an asset from scratch?" By this way of thinking, an asset is cheap only if you can buy it for less than you can build it. A man who thinks this way will not lose money over his career.
And so Fabrikant does not automatically employ SEACOR's cash flow toward new boats, helicopters and the like. In recent years, he's bought back a lot of stock. This year alone, SEACOR bought back 1.6 million shares at about $74 per share. Since 2007, he's retired 18% of the shares. When SEACOR's stock price is below book, Fabrikant is a buyer. "We manage for long-term appreciation in book value, not year-to-year earnings." I love it. Fabrikant doesn't play to Wall Street. It's probably why only one analyst – from Barclays – covers the stock. As long as you can buy the stock below book value, I think you're getting a good deal. Current book value is $90 per share. That book value is firm. SEACOR depreciates its assets more quickly than industry peers. SEACOR has also demonstrated an ability to sell assets for more than book value. And anyway, as long as Fabrikant can continue to do what he has done since 1992 – which is compound book value at a 15% clip – then this should prove a nice long-term investment. You can play around with numbers and see how this might look in three years. If book value continues to compound at 15% a year for the next three years, then book value per share will be $137. Even a modest 20% premium to book would take the stock to $165 per share. Importantly, the executives and directors own 9% of the company. Fabrikant is the largest shareholder among these, with 5%. So his interests are aligned directly with the common shareholder. Everyone's portfolio should have some room for a steady grinder like SEACOR. You can't own only the rabbits. Well, you could, but you'd need a lot of antacid. SEACOR is a sleep-well-at-night investment. Regards, Chris Mayer The Wonderful World of Charles Fabrikant 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 "Sovereign Man" On What To Look For "When The Gold Market Tops" Posted: 21 Dec 2010 08:56 AM PST
Yesterday we got to hear Doug Kass recite Howard Marks' most recent views on gold by memory (badly) and come up with the conclusion that gold may drop 25%, something not even Marks was foolish enough to suggest. Today, we present a contrary view, that of the extremely original and always provocative Simon Black, aka Sovereign Man. Writing from Auckland, New Zealand, the activist who has previously openly defended expatriation as a means of "revolting" against the collapse of US economics and society, turns his attention to gold and shares his thoughts on what to look for "when the market tops." As always Black, who has encountered more cultures in the past few months than most do in their entire lifetime, gives an unorthodox view on the metal's prospects, which if nothing else, are based on a much broader sampling of data, than merely the (biased) read of the opinion of just one other person. His conclusion is not that surprising for someone who has a worldview that is wider than just the FDR through the West Side Highway: "People are only starting to wake up to the reality that unbacked paper currency is fundamentally flawed, and it will be a long time before this belief becomes widespread once again, just as it was in ancient times." From Sovereign Man: When the Gold Market Tops Date: December 21, 2010 My friend Doug Casey has frequently written that you'll know the bull market for gold has peaked when there's a picture of a golden bull tearing up the dollar or the New York Stock Exchange on the cover of Time Magazine.
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| Bernanke Denies Printing Money. Mogambo Not Convinced Posted: 21 Dec 2010 08:56 AM 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 ... Read More...
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| Posted: 21 Dec 2010 08:32 AM PST The 5 min. Forecast December 21, 2010 12:56 PM by Addison Wiggin - December 21, 2010 [LIST] [*] Gold demand, then and now: A powerful factor propelling gold for another decade [*] Two figures that prove conclusively gold is NOT in a bubble [*] Obama signs game-changer for gold and silver coins [*] S&P record high in 2011 among “10 outrageous predictions” [*] Reader inquires the best way to play the VIX... Dan Amoss with answers [/LIST] Gold is holding steady today at $1,384. Silver is likewise firm at $29.31. For all the weeping and gnashing of teeth about the short-term ups and downs of precious metals, a couple of key facts stand out: [LIST] [*] If the year ended right now, gold would be up 26% for the year [*] Barring a major market dislocation in the next 10 days, gold will have gone up every year for 10 years in a row [*] Hard to conceive now… but silver was below $18 at the start of 2010 [/LIST] So what about gold in the year ahead? Le...
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| Gold Daily and Silver Weekly Charts Posted: 21 Dec 2010 08:31 AM PST | ||||
| Posted: 21 Dec 2010 08:20 AM PST courtesy of DailyFX.com December 21, 2010 07:12 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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| Posted: 21 Dec 2010 08:20 AM PST (CFTC Mulls Ending the Ponzi Scheme of the Dollar!) Silver Stock Report by Jason Hommel, December 21st, 2010 Please click on the following link to read my full article: CFTC Delays Position Limits Hommel, and the Yahoo Contributor's user agreement both condemn futures contracts, and ponzi schemes. Key Excerpts from my article: "Futures contracts are, in my own well researched opinion, a form of market manipulation, debt, and slavery, and thus, are totally contrary to all free market principles. It is not "freedom", to be free to enslave another, whether through a chain on someone's neck, or through a contractual obligation that can be enforced by a margin clerk, or ultimately property evictions enforced by a local Sheriff." "What's amazing is that according to the Yahoo Contributors User Agreement you also can't promote ponzi schemes. I guess Yahoo Contributors network will have to ban anyone who promotes the dollar, social security, the us government or banking....
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| Gold's gains to stay for the long haul Posted: 21 Dec 2010 08:16 AM PST by Darcy Keith Citing increasing financial and economic uncertainty and heightened geo-political tensions, the investment house says it's more confident than ever that a new base price has been put in place and that the strong gold market will continue well past 2011. "Our view is well supported by positive supply/demand fundamentals, lack of confidence in paper currencies and policy makers and concerns regarding future inflation," Raymond James analysts said in a note. [source]
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| Tinsel Tuesday – Market Decorations Make Us Merry Posted: 21 Dec 2010 08:13 AM PST
As we've been saying, there are two different worlds from the perspective of the economy, and here's a look at the two different worlds from the eyes of the media. - Ilene Tinsel Tuesday – Market Decorations Make Us MerryCourtesy of Phil of Phil's Stock World I figured out how to get bullish! Just read the Wall Street Journal. On the front page we have "Nuclear Pact Adds Backers" above the fold along with a fluff piece on the weather in Europe. There are 3 other featured articles on the front page of the World’s most widely-read financial paper and one is a fluff piece on the Jimmy Stewart museum, one is on the obscure concept of betting people are going to die (very fun and interesting but "The World’s biggest financial paper"?) and the last is on the SEC looking into Mark Hurd’s exit from HP. On the left is "What’s News" with about 30 summaries of articles in the paper so one would think you could look this over and have a really good idea of what’s going on in the World. I see that "Spain said its regional governments are on track to meet their budget targets" and Dow component Boeing (who fell off yesterday) announced a "$1 Billion commercial satellite deal with the Mexican Government" and Blackstone is starting a $15Bn fund and TD is buying Chrysler Financial for $6.3Bn and (and this is a real XMas gift to Wall Street) "A Senate deal to fund the federal government until early March doesn’t include money to enact the health-care overhaul or stepped up regulation of Wall Street" and also that North Korea held their fire during a South Korean artillery drill. Wow! All seems right with the World, doesn’t it?
Gold is up for the third consecutive day, China’s money-market rates jumped to a 2-year high as banks raised their reserve ratios (this one didn’t even make the WSJ’s on-line Asia section, but you can real all about the World’s most expensive noodles!). Pimco said "Untenable Policies Will Lead to Eurozone Break-Up" according to the London Telegraph with Andrew Bosomworth stating: "Greece, Ireland and Portugal cannot get back on their feet without either their own currency or large transfer payments. The euro crisis is not over by a long shot. Market tensions will continue into 2011. The mechanism comes far too late." Of course that’s nothing compared to Meredith Whitney’s dire warning of a financial meltdown driven by the collapse of US municipal bond auctions – a topic we discussed last Wednesday. And Meredith is just full of holiday cheer compared to David Rosenberg, who puts a fair value on the S&P at no more than 1,120 and makes many excellent points that the market is now 10% overvalued and gives "10 Signs that the Holiday Retail Season is Going Worse Than People Realize" or John Hussman, who has certainly channeled his inner Phil with "Things I Believe" too! We are, then, getting to the root of my problem – I read too much! I wake up early every morning and read my various papers and web sites and, from that, I formulate a short-term and long-term investing premise. Perhaps I have forgotten what the Great Emancipator once said:
For those of us who like to read and, dare I say, think – it’s an annoying market. Just last night, Jimmy Cramer said the 233% run in NFLX with a market cap of $9.5Bn on $113M in 2009 profits and a FORWARD p/e of 47 "is too cheap." That’s the sign we were waiting for to short NFLX again – after Cramer’s sheeple pile in, of course. AMZN is another Cramer fave with a current p/e of 74 that should drop down to 52 next year if they grow earnings the 40% analysts expect. This would be truly amazing as they "only" grew 25% this year from last and last year was a pretty easy comp to beat but hey, 36 analysts follow AMZN and just 3 have them at underperform or sell. That’s what we call pretty much "all of the people, some of the time." Now we can wait for our 3 holdouts to join the crowd or perhaps work our way into a short position on AMZN. At $183, it’s just too tempting not to and we’ll certainly try to figure our a trade on them depending on how the day goes. In the bigger picture, we’re still waiting for the Dow to confirm a breakout by holding 11,500 finally but yesterday afternoon, in Member Chat, I put up this chart and we’ll have to watch this channel very carefully because, if the Dow does fail – I very much doubt the other indexes will be able to float on their own.
The Dow finished the day at 11,478, pretty much right on the line but we have a big pre-market push as they put an unbelievable hit on the Dollar last night, dropping it all the way down to 80.57 (from 81.09) at 2am. That sent the Yen up to 83.80 at 3:30 but they knocked it back down real fast. Didn’t matter though as rumors were flying about China somehow bailing out Europe but all China’s Vice Premier Wang Qishan said was that "China supports the measures taken by European officials to combat the sovereign debt crisis." Mr. Wang didn’t comment on whether China may be interested in purchasing further European debt, but the euro still climbed sharply, by a total of 0.6% against the dollar.
Spain’s $4Bn note auction went very well, although at higher rates, of course. Moody’s warned on Portugal but everyone is bored with them downgrading Europe already. The Euro tested $1.32, which is pretty pathetic as they were $1.51 a year ago. Think about it, the Dollar is down 10% off it’s recent highs but the Euro is down 14% against the Dollar – no wonder everyone has commodity fever – except in Japan, where the Yen is UP 50% since early 2008… Gold is only up 20% against the Yen since early 2008 and oil is 25% lower - no wonder they have deflation – it’s all relative! Ho, ho, ho – that’s right, all we can do is laugh… - Phil
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| As ETFs Pass $1 Trillion In AUM, What Next? Posted: 21 Dec 2010 08:13 AM PST
Today's breach of the critical $1 trillion barrier by the Federal Reserve On/Offshore Genocide Opportunities Fund, LLC in its Treasury holdings is not the only important "trillion" milestone in the past few days. As was reported by the WSJ previously, total assets under management in the ETF space also passed $1 trillion for the first time ever, primarily courtesy of SPY, which added $11.6 billion (even as it continues to be the most shorted NYSE security in the world with 294.1 million shares short on 700 million total shares), and the IWM which saw $976 million in new assets. Granted, these numbers are just a little suspect, since according to the monthly Invesco PowerShares report, total ETF assets were still "just" $934.4 billion, but we will take Blackrock's word for it. And, considering that mutual funds, already at record low free cash levels, continue to bleed dry powder (32, and soon to be 33, consecutive weeks of outflows), and are saved from liquidations only due to levitating asset prices on this joke of a market which has absolutely no volume to it, many are trying to make the case that ETFs are rapidly becoming the next target of retail flows. Perhaps. Looking at the numbers this is certainly not as clear cut as those who specifically wish to see this, pronounce it as a fait accompli. Below we demonstrate that of the $96 billion in net flows YTD into various ETF styles, it is certainly not the case that equities are the pure beneficiaries of retail flows. That said, we present the thoughts of BNY's Nicholas Colas, who provides a useful reference guide on the history of the ETF business, and now that it has (allegedly) passed the trillion mark, looks at where the next trillion will come from (incidentally, it took the Fed four months to accumulate an incremental $250 billion in holdings; ETFs, on the other hand, as noted above, have seen inflows of $95.8 billion in all of 2010 - just wait until the Fed pulls a BOJ and starts buying the SPY openly instead of through Citadel). First, we present the Year through November data per Invesco, which shows some materially different data than BlackRock:
Using simple math, which has still surprisingly not been made illegal by the government, nor has its borrow been pulled by State Street, when we subtract the contribution of foreign focused ETFs ($31.8 billion), and Fixed Income ETFs (31.1) billion, we get $32.9 billion. Then take out commodity funds, which invest in that damned gold thingy, which have seen $9.5 billion in inflows, global (non-US) specialty, currency and speculative leveraged ETFs, and you get a meager $15.5 billion. Compared to the $95 billion in outflows from domestic equity focused mutual funds YTD, and one can see why the numbers tend to not substantiate claims that ETFs are even close to replicating the retail desire for stock participation. In other words, until we actually see a rotation from fixed income into equity products, we hope the peanut gallery can retain its enthusiasm until its claims are at least somewhat validated by facts. And now that readers have been made aware of said facts, here is a primer on what may happen to ETFs, if all works out as expected, and the ETF asset class, which according to many (Zero Hedge certainly included), are nothing but synthetic CDO type instruments, whose operation in times of copious liquidity has been proven to be viable, yet which also according to many were instrumental in creating the forward feedback loops that were reponsible for the flash crash, an event which the market has forgotten so promptly that it is certain to recur as absolutely nothing has changed since then. From BNY Convergex' Nicolas Colas: The Judgment of Paris - Origins of the Next $1 Trillion in ETF Assets Summary: Assets under management at domestically listed Exchange Traded Funds exceeded $1 trillion for the first time late last week, a notable event for this product. The inflows that put ETFs over the top were to traditional S&P 500 offerings, with SPY adding $11.6 billion and IVV posting $976 million in new assets last week. IWM (iShares Russell 2000) also saw inbound money flows, at $783 million. As the industry passes this important milestone, the logical question becomes, “Where does the next $1 trillion come from, and how long will it take?” There is little doubt that money chases performance, so the bedrock for significant growth is clearly a continuing move higher for risk assets. However, seven of the top 20 asset gathering ETFs over this year were fixed income/preferred offerings, meaning that any further back-up in rates will create a real headwind for this category. In the end we think the fundamental tug of war will be between increasing investor confidence (positive for assets) and larger asset bases at hedge funds, which tend to use ETFs on the short side (negative for asset growth). I recently came across an article that referred to the “Judgment of Paris” and was surprised to read that this phrase evokes more than one meaning.
The world of money management has its own ongoing “Judgment” at the moment: is there further growth in the world of Exchange Traded Funds? The ETF industry celebrated something of a milestone last week, reaching $1 trillion in assets under management for the first time. The abandoned husband, to borrow from the ancient story, is the mutual fund industry. Consider the brief sketches of each type of investment below:
Even with the continuing success of the product, I know from conversations with ETF sponsors and written commentary by industry watchers that there is some concern about the vectors for the next leg of industry growth. In my opinion, the ETF industry’s basic structure is sufficiently different from mutual funds that the issue is more complex than many may realize. Simple notions of investor confidence simply don’t tell the whole story. First, mutual funds and ETFs differ in some important ways:
It is only a mild oversimplification to say that hedge funds tend to use ETFs on the short side and retail investors provide the net demand. I don’t have any hard numbers to prove that contention, mind you – just years of buyside and sell-side experience watching how these constituents use the products. Despite the name, many hedge funds are long-biased, searching for names to own – be it for 10 seconds, 10 minutes or 10 months. The other side of the trade is often an indexed ETF, with the difference in performance between the long individual stock position(s) and the short ETF meant to create the alpha (outperformance) of the investment. Wonder why that heavily shorted ETF I mentioned above happens to track retail stocks? That happens to be, along with technology, one of the most widely traded sectors among hedge funds. Net new demand in this paradigm comes more from retail investors, looking for targeted, low cost investment vehicles. The primary types of hedge funds we can envision being structurally long ETFs are short-biased funds, who use the product in the same way as their long-biased brethren, but in reverse. The two exceptions are precious metals funds like gold sector market leaders GLD and IAU, which offer rock-bottom fees, and hedge funds that specialize in macro bets. If you think that assessment is reasonable, then the continued growth in ETF assets is essentially a tug of war between hedge funds and retail investors. Here is the framework for that observation:
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| Stop Shooting Yourself in The Foot! Buy The Real Silver Posted: 21 Dec 2010 08:07 AM PST By Franklin Sanders Behold, Silver Bugs, the Promised Land! Investors are piling into silver, at last having discovered silver's astounding bull market future, and silver soars daily. Adding fuel to the fire, the Internet is flaming with a campaign to catch JP Morgan short silver. With silver pistol in hand, they are, however, blasting away at [...]
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| The U.S. Dollar: Backed By The FULL FAITH AND CREDIT Of The Federal Reserve Printing Press Posted: 21 Dec 2010 08:07 AM PST (more later) 
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| Silver Outperforms Gold - Profit! Silver Underperform Gold - Profit Again! Posted: 21 Dec 2010 07:40 AM PST A long-term gold-silver ratio chart shows a wide range of 45 to 85. So do gold and silver really revert to their mean? Here the investor has to be aware of the notion of a moving average measure of the mean and use it rather than a fixed one. Read More...
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| Posted: 21 Dec 2010 06:41 AM PST Pretium Resources Inc. (Pretium) is pleased to announce that it closed its initial public offering of common shares (Offering) and the acquisition of the Snowfield Project and Brucejack Project from Silver Standard Resources Inc. (Silver Standard).
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| Top Pick Candidate for the AOL Challenge Posted: 21 Dec 2010 06:10 AM PST Well, Santa has already arrived, bearing an exceptional buying opportunity for one of our favorite junior miners and a soon-to-be producer of gold. Sometimes we get lucky in this business. Sometimes the Trading Gods are benevolent – if we have the good sense (or courage) to understand the opportunities they give us. Today the very company we have chosen for our Top Pick in Steven Halpern's TheStockAdvisors.com Top Pick Challenge for AOL announced mildly disappointing news which has created about a 12% or even a 15% discount or so for our Top Pick.
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| Debt at Every Turn: New Governors Attack the Debt Crisis Posted: 21 Dec 2010 06:00 AM PST "The Day of Reckoning has come!" So said New Jersey's new governor-elect. New Jersey is hardly unique. Practically every government in the developed world faces the same problem. National. State. Local. Expenses grew during the boom years. We all know why. Politicians prefer to spend then to save. They buy votes with other people's money. That's why they like programs for poor people. They come cheap. But the votes they buy on credit are even cheaper. Give a job…a handout…free drugs…housing subsidies – and send the bill to the next generation. With declining interest rates and an expanding economy, governments could get away with it. Low interest rates made deficits easy to finance and reduced the cost of refinancing existing debt too. The trend was always unsustainable, even when things were going well. You can't spend more than you can afford forever. Everyone knew that a day of reckoning would come. And guess what…here it is. These new governors are no dopes. They have some room to maneuver. They can blame the problems on their predecessors. They can be heroes, solving them. In cutting spending now, they'll be doing what has to be done. The smart thing to do would be to exaggerate the problems. But in the present case, exaggeration is hardly necessary. The financial problems are so grave, they don't need to be puffed up. Newly-elected governor Jerry Brown in the Golden State is in the same position. Hardly had the votes been counted when Jerry began taking more careful inventory. Naturally, what he found surprised him… He was shocked…SHOCKED…by the seriousness of the fiscal challenge. He pledged to come into the state capital with a broom the size of the Inland Empire…sweeping away unnecessary expenses and cleaning up state finances. The story is the same in practically every Middlesex, village and farm community. States and municipalities spent more than they could afford. They ran up pension obligations. They borrowed for stadia and swimming pools. And now, like Ireland and Greece, they can't keep up with the payments. What are they to do? Default! Yes, but before they do that they need to make a show of trying to be responsible. They need to talk about budget cutting and financial integrity. They will try to cut wages, close libraries, and renegotiate contracts. Some will succeed. Many won't. All we know for sure is that it will be fun to watch. We also know that people who lent money to these governments will wish they hadn't. In the US, as in Europe, there are bound to be debt crises. Cities and states will come to the brink of insolvency. There will be bailout initiatives. Austerity drives. Showdowns with unions. New York City almost went broke in the '70s. The mayor asked the federal government for a bailout. "Drop dead," said President Jerry Ford…or at least that was what was reported in the New York tabloids. The feds said no. New York had to get its own house in order. Of course, it succeeded, thanks in part to a huge boom in the financial industry that began in 1982. Will there be another huge boom in the US? Maybe. But there's a bust to live through first. And in the crises ahead, municipal bonds are almost sure to go down. Beware. Bill Bonner Debt at Every Turn: New Governors Attack the Debt Crisis 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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| Vietnamese seek safety in gold as currency wobbles Posted: 21 Dec 2010 05:56 AM PST by Margie Mason Jewelry shops and black-market money changers have overflowed with customers in recent weeks, desperate to unload their Vietnamese dong for greenbacks or gold nuggets as the fast-growing Southeast Asian nation is buffeted by double-digit inflation and the near collapse of one of its largest state-owned companies. The problems have underlined the downsides of the Communist government's push for rapid economic growth, which has lifted millions out of poverty but created new challenges that the country's technocrats are often ill-equipped to deal with. Attempts to create national corporate champions have wasted capital with unwise investments and left state-owned businesses loaded with too much debt. … It all adds up to a financial system creaking under immense pressures that are reflected in the lack of faith Vietnamese have in their country's currency. "People's trust in the local currency, the dong, has been eroded seriously," said economist Nguyen Quang A, former president of the Institute of Development Studies, the country's first independent think tank, which disbanded in protest last year following a government decree restricting the right to conduct and publish research. "One of the most important tasks of the government, specifically, the State Bank is to protect the power of the local currency," he said. "The policy aiming for high growth with inefficient investment in the economy, particularly investment in state-owned enterprises and in the government, has led to this situation." Last week, Moody's Investor Services slashed Vietnam's government foreign currency bond rating to B1 from Ba3 and kept the outlook as negative, meaning it could cut the credit rating again. … Vietnam's leaders are quick to tout the country as one of the fastest emerging economies in Asia — after China — averaging more than 7 percent growth annually over the past decade. The Communist government's embrace of capitalism since the mid-1980s followed attempts at collective farming and central planning that kept the country mired in extreme poverty after the Vietnam War ended in 1975. But despite all the country's progress, high school teacher Ninh, 33, says she's sticking with something that never loses its luster. "You can see that the dong is losing its value. Everyday, you go to the market and everything is getting more expensive," she said while exchanging 7.2 million dong ($360) for about 7.5 grams of gold at a bustling gold shop in Hanoi. "It's a safer place for my savings." [source] RS View: This school teacher demonstrates the proper balance. Currency is good for spending (the sooner, the better) while gold is the right choice for saving. Any other combination is fraught with instability.
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| What to Expect From Gold Prices in 2011 Posted: 21 Dec 2010 05:42 AM PST StreetAuthority submits: By David Sterman As gold flirts with all-time (non inflation-adjusted) highs, many investors wonder whether it can surge yet higher, or if we're merely in a bubble. Although we lack a crystal ball on that question, we do know some basic facts that help to explain just how far from a baseline value that yellow metal has come. Complete Story »
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| THe TWeLVe ZeRo HeDGe DaYS oF CHRiSTMaS Posted: 21 Dec 2010 05:38 AM PST
THE TWELVE ZERO HEDGE DAYS OF CHRISTMAS (WilliamBanzai7 and posting friends) On the ___ day of Christmas what did Wall Street send to me: Twelve, Bailed out bums a bumming. Eleven, POMO Pipers Piping; Ten, CEOs a leaping; Nine, CNBC Hoes lap dancing; Eight, mortgage brokers bilking; Seven, Black Swans a swimming; Six, Piigs defaulting (include Belgium); Five, GOLD IS KING... Four, Dodd n' Barney turds; Three, red pens; Two, Dick Boves; and A clown named Ben Bernanke...
This is a "living carol", so if you have suggested changes please post. WB7
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| What's in Your Stocking: Gold or a Pig's Tail? Posted: 21 Dec 2010 05:37 AM PST Stewart Thomson email: [EMAIL="stewart@gracelandupdates.com"]stewart@gracelandupdates.com[/EMAIL] email: [EMAIL="stewart@gracelandjuniors.com"]stewart@gracelandjuniors.com[/EMAIL] Dec 21, 2010 1. What's in your stocking? It's four days to Christmas! Is it a selection of beautifully wrapped gold bars and gold stocks, or is it a toy US dollar photocopier wrapped in a pig's tail? 2. Yesterday was another massive day for your Gold Juniors' "Golden Popcorn" cash register machine. Many juniors metals stocks soared yesterday, while others drifted. 3. Here's a look at the gold stocks big picture. GDX Chart? No, it's GDX OFF THE CHART! 4. It's time to get real. Stop letting amateurs scare you out of your positions. You're not going into Christmas as a bustout. I won't permit it! The Gold Stock rocket has been launched and it is just like when bullion launched over 1045. Nobody believed and most missed the whole ride to 1225. You're not missing t...
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| Russia's Central Bank Purchases 300,000 Ounces of Gold in November Posted: 21 Dec 2010 05:30 AM PST "Big silver withdrawal from Switzerland'sZürcher Kantonalbank last week. Australia's Perth Mint has 'production' problems. Baltic Dry Index looks pretty ugly. John Embry talks about gold. Jim Rickards speaks... and much more. " Yesterday in Gold and Silver There's not much to talk about in gold market action for Monday's trading session. The price started out strongly at the start of trading in the Far East... and held on to its $10 gain right up until the Comex opened in New York at 8:20 a.m. Eastern time. The low of the day... $1,375.30 spot... occurred moments before 10:30 a.m. in New York... and then recovered all its losses before the trading day ended at 5:15 p.m. Volume was light. Silver had gained about two bits by the time trading began in Hong Kong yesterday morning... but lost all those gains by the New York open... and then got smacked [just like gold] between 9:45 a.m. and 10:28 a.m. Eastern time. The low price of the day was $28.77 sp...
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| Alka Singh: Gold Equities' Upside Greater than Gold Posted: 21 Dec 2010 05:24 AM PST Source: George Mack and Karen Roche of The Gold Report 12/20/2010 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? Alka Singh: That's a great question because a lot of people think that precious metals (PMs), uranium and base metals are all metals and mining. What they don't understand is that there are different drivers for each sector. The supply and demand determine the price of gold, but the gold price also ch...
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| Dec 21st- A sample real time ABC pattern Posted: 21 Dec 2010 05:23 AM PST By David Banister, Active Trading Partners This pattern combined with the weekly triangle over 8 Fibonacci weeks is bullish for traders. (REE) I went long at 9.55 and 9.42 over Friday and Monday, looking for a swing to 10.50 short term, and 13-14 plus after possible.
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| Gold and Dow: Liquidity Flows For 2011 Posted: 21 Dec 2010 05:17 AM PST Graceland Update
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| Posted: 21 Dec 2010 05:14 AM 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." More articles from The Daily Reckoning….
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Minefinders is not a perfect company by any means as it is recovering from a second quarter setback as many mining companies do when first bringing a rather large project online. In June of this year, a phase 1 torn leach pad lead to a substantial shortfall in expected output. Management has located the tear, with repair work likely to continue to the end of Q4 and possibly into the new year. While Q4 output will be somewhat hindered, there should be a sharp turnaround in operating performance at the start of the new year. Higher grade ore is currently being stacked in the phase 2 leach pad which should drastically turn around operating performance over the next four months. Though unfortunate, this has suppressed the market price of the company providing investors a great opportunity to get in a high quality miner at bargain prices. 
Financial uncertainty in Europe is helping gold buck the Christmas season slump that typically comes as traders and investors cash in profits on gold made earlier this year. Credit-ratings agency Moody's warned that it may downgrade Portugal's A1 long-term government bond rating, citing uncertainties about the country's long-term economic health and its abilities to refinance debt at a sustainable price. Meanwhile, Fitch Ratings put Greece on downgrade watch, warning it may push the country's credit grade into junk territory…
If I just read the WSJ, I find no reason to be bearish at all. Certainly there is no mention of 
I keep fixating on the last part but it’s that first part that Murdoch and Company thrive on. You CAN fool some of the people some of the time and even all of the people some of the time. Currently, it seems, we are either fooling all of the people (
Also killing the dollar and boosting the Euro is the 
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