Gold World News Flash |
- GoldSeek.com Radio Gold Nugget: Steve Forbes & Chris Waltzek
- How to Spot the Top of the Gold Market
- Bloomberg Counters Gold’s Run with Absurd, Baseless Hit-Piece
- The Next Financial Meltdown, State Budgets Day of Reckoning
- Can Cities Legally Buy Silver or Gold?
- The re-printing of “Pieces of Eight”
- Gold Seeker Closing Report: Gold and Silver Close Near Unchanged
- Must Read Introspective: A Look Back At 2010 Events, Key Market Themes And The Circular Nature Of Everything
- Gold Price Floated Between $1,382.65 and $1,386.80, Must Not Close Below $1,380
- Interviewed on CNBC, CFTC's Chilton defends position limits
- Interviewed on CNBC, CFTC's Chilton defends position limits
- Soho Resources Corp
- How to Double the Debt in 5 Years
- Trader Dan Comments On Today's Commodity Market Action
- Guest Post: House Values Fall 30%, But Property Taxes Keep Rising
- WEDNESDAY Market Excerpts
- Behind the “Recovery”
- Behind the “Recovery”
- NYSE October Margin Debt Jumps To Highest Since Lehman Failure As Investor Net Worth Is At Lowest Since April Highs
- Is Brazil For “Real?”
- Las Vegas The Next Detroit
- Is Brazil For “Real?”
- GoldMoney Foundation assists new edition of Vieira's 'Pieces of Eight'
- GoldMoney Foundation assists new edition of Vieira's 'Pieces of Eight'
- Gold Daily and Silver Weekly Charts
- Investor ETF Madness hits $1 Trillion
- The First Casualty Of An "Improving" Economy: The Fast Food Dollar Menu, As McDonalds Considers Hiking Prices
- Monitoring Takeover Targets In Gold and Silver Junior Mining Stocks
- Is A Police State Worth Fighting For?
- Wednesday’s Worry – ETF Madness hits $1,000,000,000,000
- IMF Completes 403.3 Tonne Gold Sales Program
- IMF gold sale completion – out with a whimper
- How to Spot the Top of the Gold Market
- Are We in a Gold Bubble?
- LGMR: Gold Flows to China Rise Sharply (and Early) Ahead of New Year
- Soaring With the Eagles
- The Details Of The CitiFX Contrary Call For A Watershed Bear-Market 2011
- Volatility Set to Pick Up in the New Year
- Is There Any SNB Out There? Eurostoxx' Head Deep In Koolaid
- If only Bloomberg believed in a transparent gold market too
- Is Your Gold Worth the Paper it's Printed on?
- We Are Now Paying for the Destruction of the US Dollar and Economy… Literally
- Oil breaks $90, copper prices surge
- In The News Today
- Just Print More Money: The Easy Way to Manage and Economy
- Precious Metals Propaganda Games
- CNBC - Gold and Standardisation
- US Data Releases Could Move the Markets
- Hinde Capital Sees Gold Breach $2,000 in 2011
- Jim's Mailbox
| GoldSeek.com Radio Gold Nugget: Steve Forbes & Chris Waltzek Posted: 22 Dec 2010 07:00 PM PST GoldSeek.com Radio Gold Nugget: Steve Forbes & Chris Waltzek
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| How to Spot the Top of the Gold Market Posted: 22 Dec 2010 06:33 PM PST Chris Weber writes: I recently read an article about the famous Aden sisters in BusinessWeek. Something Mary Anne Aden said in it really struck a chord with me. In the midst of showing the generally fantastic track record of the Adens, they talk about their "biggest goof": how they stayed bullish on gold in the early 1980s. "We were new to the game," said Mary Anne. "We were feeling enormous pressure from our subscribers to stay bullish."
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| Bloomberg Counters Gold’s Run with Absurd, Baseless Hit-Piece Posted: 22 Dec 2010 06:16 PM PST Monday morning I was greeted via my inbox with a Bloomberg report on Gold. Bloomberg has a series called “The Dark Side of Gold.” Its important to note this isn’t the first time the news organization has attempted a hit-piece on Gold. Iwroteaboutthisexactlyoneyearagoand identified the cases and examples of Bloomberg’s gold bashing.
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| The Next Financial Meltdown, State Budgets Day of Reckoning Posted: 22 Dec 2010 05:59 PM PST Steve Kroft Reports On The Growing Financial Woes States Are Facing. The day of reckoning is at hand. Steve Kroft tells us what we need to know about the looming financial crisis that almost no one is talking about.
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| Can Cities Legally Buy Silver or Gold? Posted: 22 Dec 2010 05:11 PM PST (Legally, according to the CA code? What about other States?!) Silver Stock Report by Jason Hommel, December, 2010 The precious metals community of advocates may need legal assistance. Position letters, or even lobbying. Most of the money in this world, in the USA, sits in government pension plans. Some of those who direct such plans say they are not legally allowed to buy silver or gold. Is this true? Do we need to change the law? Can they buy certain ETF's? I need help to be able to answer these questions. Please read the following exchange: A Precious Metals Advocate writes to a City Manager: I have suggested to this council that they take a hard look at precious metals for investing the treasury funds of Culver City. I first asked the council to do this in Dec 2008. Gold was under $800, it currently is approaching $1400. In the CAFR from 2008-2009 the treasury reported a less then 4% return on investments. Not bad but had you invested in gold...
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| The re-printing of “Pieces of Eight” Posted: 22 Dec 2010 05:03 PM PST FGMR - Free Gold Money Report December 22, 2010 – I am pleased to announce the re-printing of Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution by Edwin Vieira. This is a special run of the 2002 revised edition of the two-volume, 1,700+ page study of American monetary law and history that has been out of print and virtually unavailable (except at scalpers’ prices) since 2006. This reprinting, which is being supported by the GoldMoney Foundation, is now underway at RR Donnelley & Sons Company, one of the premier printers in the United States. Books are only available directly from Edwin, who will arrange for delivery to each buyer when the books are ready around mid-January 2011. Those who have had an opportunity to peruse this book know that there is nothing equivalent on the market, and likely never will be again. And those who have not seen it will find it to be as comprehensive and complete a study of money and ban...
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| Gold Seeker Closing Report: Gold and Silver Close Near Unchanged Posted: 22 Dec 2010 04:00 PM PST Gold rose $3.13 to $1390.83 in early London trade before it fell to see a $2.42 loss at $1385.28 in midmorning New York trade, but it then bounced back higher in the last few hours of trade and ended with a loss of just 0.09%. Silver climbed to $29.475 and fell to $29.183 before it also rallied back higher and ended unchanged on the day.
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| Posted: 22 Dec 2010 03:38 PM PST
Tonight's must read piece of introspection comes from the keyboard of Russ Certo over at Gleacher, who has compiled a fantastic look back at the key events that transpired and shaped 2010, and summarizes the key market themes that prevailed in the now past year. In summary: "the answer to the question of what were the main themes in the market is ...............valuations in equities, credit spreads, sovereign spreads, exchange rates, mortgage interest costs, bank earnings, net interest margin, accounting schemes, tax code, debt ceiling and more are all related. Related to the ebb and flow of monetary and fiscal policy aspiring to make adjustments to imbalances caused by earlier failed fiscal and monetary policies. How, circular indeed." In other words, not only does history not only rhyme, but chases its tail, and the more things change, the more absolutely nothing has changed. We are where we started, and in fact are in a far worse position, as increasingly fewer last resort levers to push and pull are available to the fiscal and monetary authorities. We jest when we suggest that a Martian bail out of plant Earth will soon be required, but pretty soon, in our Onion (or is that Douglas Adams?) reality, NASA may find itself with the prerogative to rapidly find semi-intelligent and very wealthy life on other located within a few parsecs. We can only hope that the restaurant at the edge of the universe is an In and Out Burger. It's A Wrap, by Russ Certo, Gleacher We await a supply announcement tomorrow of next week's 2yrs, 5yrs, and 7yrs. Further, there are two 3-4yr area buybacks next week as well to conclude the Fed buybacks/Tsy auction circular reality for the year. Treasury selling Fed buying. I recall in recent history that the Treasury market has suffered meaningful setbacks anticipating supply weeks during recent holiday shortened weeks/sessions in the last quarter. I believe limited street balance sheet and an opportunistic leveraged community are/were the main culprits. I'm guessing that by the end of the week, traders, trading accounts, and funds will likely be looking for a spot to push the market lower for a supply trade. One man's opinion. The above rate call is despite the fact that European bank funding is dysfunctional. And we can see this anecdotally in a variety of expressions but also in the Fed's explictly telegraphed renewal of FX swap lines with foreign central banks yesterday. Explicitly telegraphing a statement is policy action itself as the bank doesn't need to announce these measures. But the desire to semantically communicate can provide a policy function which serves gradualist preservation dry powder policy approaches to save the full arsenal of tools for some other time when capital markets sniffs out inbalances. What does it mean when the Fed still has to provide year end FX liquidity? What does it mean when the EU has to issue new paper as part of funding the new EU mechanism bail out fund? Will central banks buy? Will they sell sovereign or supra or agency paper to make room for purchases? With IMF and EFSF (European Financial Stability Mechanism), European Commission and ECB review and sponsorship along with triple A ratings from Moody's, Fitch and S&P it feels like central bank likely buyers are buying themselves. Hey, new concept: Try to figure the spread price talk of buying yourself? What spread to yourself are you willing to buy? All circular. We'll skip over the agency debenture market mainly, which is supposedly a liquid market, only other to say that callables, in particular, are nearly untradable. Although some may debate this conversations with traders that have yard+ books suggests otherwise. So does personal experience. The irony is that swaps have ratcheted in despite extreme illiquidity and low volumes in liquid markets and a lack of swappable new issue calendar and where large money center banks can't procure all their funding needs. Mind you, liquid Treasury market volumes at 50% of normal with most of the activity in year end window dressing bill space. Bills are half the volume today. Off the run Treasuries were performing horribly as of late, almost near LTCM type on the run/off the run "itis" which not only had the belly of the curve underperforming but also the off-the-runs in the belly (7yr) faring the worst. Go figure that when the Fed announced the newest rung of buybacks two weeks ago that they conveniently started with the 7yr sector and the off the runs. Further, the decision by the Fed 48 hours ago to "clarify" that they can acquire up to 70% of any issue, conveniently served as a "stability" lip service boon to off the runs. Recall, they recently relaxed the rule which limited purchases of any one issue to not exceed 35%. Again, communicated with explicit tongue and cheek for the desired effect during year end illiquidity and carnage in dealer sheets, balance sheets. I was asked earlier how to summerize trading themes of 2010. Well, after looking at some notes and a walk down memory lane, I am reminded of Tiger woods being cited for "careless driving" and I have the official photo post "accident". But as I look back to 12/09 is see headlines:
Given the rudimentary walk down memory lane above, I think themes have come full circle. So the answer to the question of what were the main themes in the market is ...............valuations in equities, credit spreads, sovereign spreads, exchange rates, mortgage interest costs, bank earnings, net interest margin, accounting schemes, tax code, debt ceiling and more are all related. Related to the ebb and flow of monetary and fiscal policy aspiring to make adjustments to imbalances caused by earlier failed fiscal and monetary policies. How, circular indeed.
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| Gold Price Floated Between $1,382.65 and $1,386.80, Must Not Close Below $1,380 Posted: 22 Dec 2010 03:00 PM PST Gold Price Close Today : 1386.80 Change : (1.40) or -0.1% Silver Price Close Today : 29.367 Change : (0.009) cents or 0.0% Gold Silver Ratio Today : 47.22 Change : -0.033 or -0.1% Silver Gold Ratio Today : 0.02118 Change : 0.000015 or 0.1% Platinum Price Close Today : 1723.65 Change : 12.75 or 0.7% Palladium Price Close Today : 750.20 Change : 8.20 or 1.1% S&P 500 : 1,258.84 Change : 4.24 or 0.3% Dow In GOLD$ : $172.31 Change : $ 0.58 or 0.3% Dow in GOLD oz : 8.335 Change : 0.028 or 0.3% Dow in SILVER oz : 393.62 Change : 0.90 or 0.2% Dow Industrial : 11,559.49 Change : 26.33 or 0.2% US Dollar Index : 80.63 Change : -0.088 or -0.1% The GOLD PRICE kept on treading water today, yea, with less bobbing than yesterday. Floated between $1,382.65 and $1,386.80. This narrowing range only promises that the eventual breakout will be violent. Gold must not close now below $1,380. Overhead $1,392 blocks the way. The SILVER PRICE didn't feel up to pioneering leadership today, so merely plodded along behind in gold's row, bounded by 2916c and 2945.3c. Comex closed down a laughable 9/10 of a cent at 2936.7. Nothing happening there. Accident vs. Substance. Folks keep on hounding me about the Internet campaign to break JP Morgan -- supposedly short tons of silver -- by buying silver. Theory is that buying will so press the market that JPM will go belly up, just punishment for shorting silver and suppressing the price, and silver will skyrocket. Now whether JP Morgan is as short as these folks claim I am not informed enough to judge. I doubt not that the US government beginning about 1995 acted through intermediary bullion banks to suppress gold and so lower the long term interest rate and attempt to create -- yawn! -- perpetual prosperity, like numerous other megalomanics in history. Of course, the veriest parvenu knows that gold cannot be suppressed without suppressing silver also, because a declining gold price against rising silver (a falling gold/ silver ratio) would give away their game. Thus I doubt not that the same bullion banks acted to suppress silver. Who was involved other than the Nice Government Men I leave to those more knowledgeable than I. It goes without saying (but of course I will say by apophasis) that after 2001 the price suppression scheme has been as notoriously incompetent as any other government scheme, suppressing gold from $252 to $1,400 and silver from 400c to 3000c. The "suppression" has only served to raise the price a little faster, it seems. Yet the true-believing fervor around this JPM business prompts me to point out the difference between accidents and substance, or, as the Germans might say, Schein und Sein, appearance and reality. Accidents are all those chance characteristics surrounding substance. In the 1970s silver bull market "the world was running out of silver" and "the Indian silver hoard was about to come onto the market/the Indians would soak up the excess." Today it's JPM. Every bull or bear market spawns dozens of meretricious reasons to explain why the market is trending up or down, but most of these are just the accidents of the day, the trappings that shroud the market. They never are the motor that drives it: that is the substance. What is the substance of a bull market in silver and gold, the motor that powers it? Monetary demand, arising from fear of fiat currencies. Why am I soaking up your valuable time with this discussion? Simply because every one of us who wants to think clearly must learn to distinguish between Schein and Sein, between accident and substance. Otherwise we will become the ready victims of every enthusiasm, fanaticism, and hysteria that comes along. It is enough to identify the primary trend, and to identify its motor. Regardless of accidents -- and there are always plenty of accidents, persuasive and urgent -- that bull or bear market will unfold in pretty much the same way, with its own peculiarities ("accidents") of course, as most other markets. It doesn't pay to let accidents distract your attention from the big picture. In other words, keep your eye on the motor, not what brand of oil filter is installed on it. Now, before you write me a steaming e-mail about how I am aiding and abetting the enemy and how stupid I am, go back and read what I wrote. I did not deny the price suppression, I only question its effectiveness, and deny that is the motive power of this bull market. Is it a crime? Sure, but a hilariously incompetent one. Evil is merely silly, never grand, never omnipotent, but it can kill you, like measles. TODAY nothing much happened at all. The US DOLLAR INDEX danced sideways again, between 80.281 and 80.781. Clearly, 80.80 blocks its road, but the stall probably arises from the looming Christmas holiday. Who wants to take a big position before a 3-day weekend, over which anything at all might happen? The DOW today scratched together 26.33 points and rose to 11,559.49. S&P picked up 4.24 and toted up the day at 1,258.84. No change here, no improvement: outlook grim, but "there are people who don't know and you can't tell 'em." MARKETS are sleeping ahead of the Christmas holiday. Expect no big action before St. John's Day, maybe Holy Innocents (28 Dec.). 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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| Interviewed on CNBC, CFTC's Chilton defends position limits Posted: 22 Dec 2010 01:43 PM PST 9:38p ET Wednesday, December 22, 2010 Dear Friend of GATA and Gold (and Silver): Interviewed for five minutes on CNBC's "Fast Money" program today, CFTC Commissioner Bart Chilton derided the assertion of a commodity exchange operator that large market shares don't interfere with free markets. Chilton insisted that position limits are necessary to prevent market manipulation, even as he acknowledged that preventing manipulation is likely to require the cooperation of exchange regulators in many countries. You can watch the interview at the CNBC archive here: http://www.cnbc.com/id/15840232/?video=1706782569&lay=1 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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| Interviewed on CNBC, CFTC's Chilton defends position limits Posted: 22 Dec 2010 01:43 PM PST 9:38p ET Wednesday, December 22, 2010 Dear Friend of GATA and Gold (and Silver): Interviewed for five minutes on CNBC's "Fast Money" program today, CFTC Commissioner Bart Chilton derided the assertion of a commodity exchange operator that large market shares don't interfere with free markets. Chilton insisted that position limits are necessary to prevent market manipulation, even as he acknowledged that preventing manipulation is likely to require the cooperation of exchange regulators in many countries. You can watch the interview at the CNBC archive here: http://www.cnbc.com/id/15840232/?video=1706782569&lay=1 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: 22 Dec 2010 12:53 PM PST Soho Resources Corp. is a junior exploration and development company strategically focused on gold, silver and base metals in the prolific Sierra Madre Belt of Mexico. Read More...
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| How to Double the Debt in 5 Years Posted: 22 Dec 2010 10:00 AM PST As a paranoid and angry lunatic, I am always nervous and on the suspicious lookout for subtle signs of danger that I know are all around me because the foul Federal Reserve has created, and is still creating, So Freaking Much Money (SFFM), which means that the terror of ruinous inflation in prices is a dead-bang, take-it-to-the-bank, guaranteed certainty. And there is no telling what people will do when faced with both the ruinous deflation of the value of their assets and the unbelievable, catastrophic inflation in the prices of food and energy that seems so sadly certain, which is a nice phrase if I do say so myself, conveying, as it does, a sense of resigned melancholy instead of my more usual hyperbole of anger, hatred, betrayal, outrage and thirst for revenge against the treacherous Federal Reserve for creating so much excess money and against the corrupt Congress for allowing it! Unfortunately, this is not about how I have the lyrical soul of a poet, but about how these people are the same average idiotic Americans who have, for more than half of the last century, been electing and reelecting Congresses that have enacted huge, growing, cancerous budgets that deficit-spent a gigantic $14 trillion in new national debt – a sum equaling GDP! And these same disastrous weenies have borrowed and deficit-spent more than half of that $14 trillion national debt in just the last 10 years! And now they are on track to double the debt again in the next 5 years! Gaaah!! We're freaking doomed! Doug Noland in his PrudentBear.com commentary does not mention this kind of mental and fiscal insanity directly, much less leading to the Hysterical Mogambo Conclusion (HMC) that we should be frantically buying gold, silver and oil in a frenzied, single-minded panic. Instead, with the calm and dispassionate objectivity of the classic reporter, he notes that the latest Federal Reserve Z.1 "flow of funds" report shows that "This year will mark the second consecutive year where federal borrowings will have actually expanded more than the growth of total Non-financial borrowings. Nothing similar to this has happened in the post-WWII period." Yow! This is the kind of "danger signal" that I am talking about! The actual figures are that in just the last 9 quarters, which a little over 2 years, "total federal liabilities" exploded by a whopping $4.013 trillion, which increased the national debt by 60% in those aforementioned Two Freaking Years (TFY)! TFY! Even more astoundingly, "After doubling mortgage Credit in less than 7 years, our system is now on track to double federal debt in about four years." Gaaahhhh! I thought it was 5 years! I scream anew in outrage and fear! Gaaahhh! Suddenly, I am screaming in fear, but at the same time I am watching, as if in an out-of-body experience, little specks of spittle fly out of my mouth as I am screaming, and I am thinking to myself, "That's the problem with linear thinking! If I pursued a career of fame and fortune as The World's Fattest Man (TWFM) and weighed in at 1,500 pounds, can I actually double my weight in 4 years to 3,000 pounds? And then 4 years later double my weight again to 6,000 pounds? And then again to weigh 12,000 pounds?" The answer is, obviously, "Not without a lot of tasty grub! Hahahaha!" Fortunately, speaking of tasty grub calms me down enough so that I can read that the report also showed that combined local, state, and federal expenditures were up, and still totals about half of our $14 trillion GDP, even though the federal government borrowed and spent a whopping $1.8 trillion in the last 12 months, which may explain how Total Compensation increased 3.0% in the last year, rising to $8.03 trillion, which seems paradoxical since unemployment, at an "official" 9.8% and (according to John Williams at shadowstats.com) is unofficially 22%, is a Big, Big Problem (BBP). Even more surprising was that Household Assets increased $1.2 trillion to $68.8 trillion, while Household Liabilities were $13.9 trillion and did not increase much because, I assume, people did not spend a lot of borrowed money in the last quarter. The report handily subtracts liabilities from assets and concludes that that Household Net Worth increased $1.19 trillion during the third quarter, rising to a surprising $54.9 trillion, which is almost 4 times Liabilities, thus everything should be peachy keen and couldn't be better except for, you know, that pesky unemployment thing. If you believe that, then you will not be interested in the Mogambo Big Plan (MBP) to buy gold, silver and oil as protection against the roaring, catastrophic inflation caused by the Federal Reserve creating so much money, and the federal government borrowing it and spending it. And to tell you the truth, I don't know whether or not I believe any of it, and I only follow the Mogambo Big Plan (MBP) because it is fool-proof and so easy that I giggle with childish delight, "Whee! This investing stuff is easy!" The Mogambo Guru How to Double the Debt in 5 Years 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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| Trader Dan Comments On Today's Commodity Market Action Posted: 22 Dec 2010 09:47 AM PST Dear Friends, Observing the price action in the commodity markets today has given me great reason for concern for that which I feared seems to have occurred, namely, the crude oil market has broken out to the upside. I suppose it was just a matter of time based on the orgy of fund buying across the commodity sector but I was secretly hoping that we might avoid such a close mainly to prevent what now seems to be a certain price rise for the cost of energy. Heretofore, the soaring CCI (Continuous Commodity Index) has been moving higher mainly based on food and metal costs. Now we have the trifecta where the three main segments of that index are moving higher in tandem. Actually, given the extent of the price run in the food and metals sector, the energy sector has a lot of ground to make up. Yesterday crude put in its best close in 26 months. Today it has closed above what has become both technical and psychological chart resistance at the $90 level. Should it end this trading week above $90, holiday trading conditions or no holiday trading conditions, it will put in its best weekly close since October 2008. Moving forward into the New Year, it looks most probable that it is going to make a run at $100. My fear mentioned above is that in addition to consumers soon to get walloped with sticker shock at the grocery stores within the space of a few months as the price rise works its way through the distribution channels, they were also going to get hit with rising gasoline and energy costs, a double whammy for their pocketbooks at the time that many can ill afford it. There are so many struggling families dealing with lost incomes and underemployment for those fortunate enough to have found work, that any further price pressures on the energy front would act to take some of them over the edge financially. Many are having to cut expenses drastically in an attempt to stay in their homes. How soaring food and energy costs are supposed to benefit the economy escapes me. The ivory tower types of the monetary realm are completely disconnected from the havoc and harm that they have caused so many with their incredibly short-sighted and foolhardy monetary policies. The Federal Reserve is presiding over the deliberate and planned unleashing of the inflation genie without the least bit of concern as to how that is going to affect the average middle class American. Words cannot express the contempt and disdain I have for this group of elitists. Keep in mind how this entire debacle began and the "medicine" that has been brought forth to supposedly cure it. If this is the cure, they are only succeeding in slowly killing the patient. There does not seem to be any end in sight to the continued money creation efforts of the Fed so all that we can do is attempt to protect ourselves and our loved ones from their depredations upon our life savings. The bond market, while currently being artificially propped up by these snake oil salesmen, looks heavy, even in spite of the massive buys it is seeing as the Fed makes the purchases that are part of its QE (money printing) program. Once that market breaks down in earnest, it will not take much to see a cascade of selling erupt as bond holders head to the exits. I suspect that the Chinese are more than seriously concerned about their national wealth, a large part of which still remains trapped in these worthless IOU's called Treasury Debt. Long term rates could then rise quite rapidly as bondholders experience a selling panic and feverishly attempt to avoid being the last man standing in what might well become a sort of perverse game of musical chairs. Their actions will create a cycle in which selling intensifies. The resulting rise in longer term interest rates will work to continue depress the Real estate sector not to mention hit thousands of homeowners trapped in adjustable rate mortgages which will then reset to a rate that may force even more of them out of their homes. Quite frankly, I see nothing on the horizon preventing this from occurring at this point because the Fed cannot create enough money to buy up all the outstanding Treasury debt that is going to be unloaded. Oh they conceivably could I suppose but at what cost to the Dollar! Jim has said it more than once over the last few years that these derivative creators and vile peddlers have destroyed us all in their greed. Many of you have not understood what he has been saying or perhaps felt that it was an overreaction. Rest assured, the fallout from this sordid mess is now rapidly descending upon us. The Fed created this travesty under the tenure of Mr. Greenspan who never saw a potential problem on the horizon without throwing money at it. For that, he was stupidly hailed as "The Maestro". His madness, of lowering interest rates to ridiculously low levels, gave rise to the hedge fund industry and its attempts to then find yield in any sector that it could. The wave of speculative frenzy unleashed then crashed into one sector after another only abating when the derivative market blew all to hell which was inevitable. Enter Mr. Bernanke, who then revitalized the beast of speculative frenzy by one upping his predecessor. Much like Beowolf's golden horn raised the dragon, Bernanke's QE idiocy fan the fires of leveraged insanity as he practically begged the hedge funds to buy commodities to induce inflation and ward of his ridiculous fear of deflation. The results are now obvious. Nice going guys – you can sit in your ivory tower and quietly study the effects of your brain child while Middle America slowly dies of price asphyxiation. A pox on your entire house. Click either chart to enlarge in PDF format with commentary from Trader Dan Norcini
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| Guest Post: House Values Fall 30%, But Property Taxes Keep Rising Posted: 22 Dec 2010 09:42 AM PST
Submitted by Charles Hugh Smith from Of Two Minds House Values Fall 30%, But Property Taxes Keep Rising Even though home values have plummeted by a third, property taxes are increasing: welcome to the Great Middle Class Squeeze.
Local governments should go back to the revenues and budgets of pre-bubble years, but instead they are jacking up rates to maintain revenues, even as valuations have fallen off a cliff. Bubble-era prices and equity are gone, it seems, but bubble-era property taxes are here to stay.
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| Posted: 22 Dec 2010 09:34 AM PST Gold holds steady in narrow range-bound trading The COMEX February gold futures contract closed down $1.40 Wednesday at $1387.40, trading between $1385.60 and $1391.70 December 22, p.m. excerpts: see full news, 24-hr newswire…
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| Posted: 22 Dec 2010 09:22 AM PST The 5 min. Forecast December 22, 2010 02:21 PM by Addison Wiggin - December 22, 2010 [LIST] [*] Third-quarter GDP still a surprise... what the numbers mean for your favorite S&P stocks [*] "Margin squeeze" and other 2011 trends worth paying attention to... plus two great shorts from our stock market vigilante [*] Euro near two-month low against the dollar… but euro woes reveal unique opportunity [*] Latest terror to U.S. citizens: 'the Prius is too quiet'... but at least federal regulators are there to save you... [*] Bloomberg ballyhoos gold bubble, tax evasion via Gold Eagles and your take on the “10 Outrageous Predictions” for 2011… all among our mailbag goodies [/LIST] Given what we were expecting, the third and final revision by the Commerce Department of third-quarter GDP figures in the U.S. is a pretty good number. Alas, the Street was looking for something higher. Despite their best efforts, the quants on L Street could onl...
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| Posted: 22 Dec 2010 09:21 AM PST by Addison Wiggin - December 22, 2010
 Given what we were expecting, the third and final revision by the Commerce Department of third-quarter GDP figures in the U.S. is a pretty good number.Alas, the Street was looking for something higher. Despite their best efforts, the quants on L Street could only deliver an annualized growth rate of 2.6%, a scant improvement on last month’s guess of 2.5%. Traders were betting on 3%.   Looking under the hood, we see a curious optimism for holiday spending. The bulk of the increase can be traced to businesses building up their inventories to the tune of $121.4 billion. Take that away and the increase would be less than a percent, annualized.If holiday shoppers don’t swipe their plastic over the next eight-12 days at the rate supply managers across the country are anticipating, the third quarter won't look quite so rosy. For the record, we’re agnostic on whether consumers are opening their wallets for the holidays. The incessant media rah-rah appears to be based on either anecdotal evidence or statistics from the retail industry. Or just holiday good cheer. Or eggnog with the good stuff in it. In any case, corporate cash flow is slowing from a stream to a trickle. From the Commerce Department report: “Current-production cash flow (net cash flow with inventory valuation adjustment) -- the internal funds available to corporations for investment -- decreased $68.4 billion.”  And that's the real trend we've been following on for the better part of the post- autumnal equinox period: “margin squeeze.” Many firms’ costs are rising, but their ability to pass on those costs to customers is not.The trend is especially noticeable in the food industry, rocked by rising commodity costs (wheat and corn will probably end the year up 50%). We’re hearing one earnings miss after another lately -- Kroger, General Mills, Chef Boyardee, ConAgra.  “Last week,” writes Strategic Short Report editor Dan Amoss, “an American icon, A&P, filed for Chapter 11 bankruptcy. It had too much debt, a unionized work force, too many unfavorable store leases and a toxic relationship with its key wholesaler.“Investors have yet to anticipate how bad conditions will get for grocers. Not only do wholesalers and mammoth packaged food companies have more negotiating leverage over pricing, negotiating leverage will be critical.” That’s because with food, like everything else, it’s no longer ‘all about us.’ “U.S. consumers no longer dominate the demand side of the process for determining food prices,” says Dan. “People in emerging market economies are getting richer, and one of the first things they do with this newfound wealth is improve the quality of their diets.” Further, “grocery chains have been assaulted by new, aggressive competition from Wal-Mart, Target and even drugstore and ‘dollar’ store chains.” Dan points to a recent UBS study on rising food prices. It concludes that grocers are the weak link in the chain of passing through food price increases to stretched consumers. “That puts grocers’ gross profit margins at risk,” says Dan. He sees one of two scenarios playing out during 2011 -- neither one good for grocers:
As our resident stock market vigilante, Dan has targeted two grocers as especially vulnerable during 2011. Apply his strategy and you could potentially double your money while they tank. How can you pull it off? Find the answer here.  The major stock indexes are flat after yesterday’s gains on thin pre-holiday volume.Nothing else is moving much, either. Gold is about where it was 24 hours ago, at $1,388, silver at $29.29. The dollar index is also going nowhere fast, at 80.7.  The euro is steady against the dollar this morning at $1.31 -- near a two-month low against the dollar, and an all-time low against the Swiss franc.“The Swiss franc has benefitted from a shift out of the euro,” says EverBank’s Chris Gaffney, “as the sovereign debt crisis in Europe continues. The Swiss currency is still a favorite ‘safe haven’ for investors, even when the risks are based on the European continent.”  "A falling currency and massive bailouts are actually helping Germany,” adds our income investing specialist Jim Nelson.“The majority of the supposedly at-risk PIIGS -- Portugal, Italy, Ireland, Greece, Spain -- bonds are held by foreign governments. Germany’s banking system holds a whopping $394 billion in PIIGS debt. That’s 9.3% of its total foreign debt exposure. So without these bailouts, the German banking system would take a serious hit. “Merkel may seem to be losing the debate on whether to let the PIIGS fail, but her country is all the better for it.” As the euro falls, eurozone exports should rise. “Germany, being the industrial powerhouse it is, will see even better growth,” Jim says. “With more orders comes higher demand for a number of industries, like shipping, telecommunications and energy.” With all that in mind, Jim revealed a German income opportunity delivering a 6.1% yield… with the potential for a 237% capital gain to boot. He has the full write-up in the current Lifetime Income Report. [Ed. Note: If you’re not yet a subscriber, you can get in today and learn about another outstanding European income opportunity. Jim likes it so much he calls it “the ‘other’ government-backed retirement program.”  In a further demonstration of Congress’ commitment to pursue extraordinary means to solve nonexistent problems, we have this: A bill to make “green” cars noisier.When a Toyota Prius runs on its electric motor, it makes very little noise. Supposedly, this poses a mortal danger to blind pedestrians. Except that the government’s own accident data shows no increase in the deaths of blind people due to pedestrian accidents in the decade that hybrids have been around.  In fact, the overall rate of pedestrian (and cyclist) deaths and injuries has fallen steadily since 1994. No matter, the Senate recently passed a bill requiring automakers to come up with some sort of noisemaking apparatus. Just imagine where this could go: “One opportunity for automotive marketers and startups,” according to the Green Car Reports website, “is the emerging business of supplying drivetones, the automotive equivalent of cell phone ringtones. Want your green car to rev like a Ferrari or BMW? Just buy the right drivetone and crank up the exterior volume.” Yeah, the sound of a 12-cylinder Maybach coming from a Nissan LEAF. We’re not sure which would be louder -- the noise generated by the drivetone or the laughter it would induce from passersby. But at least our roads would be safer. Ugh.  “Yesterday, Bloomberg did a segment on gold,” writes a reader who read our 2011 gold outlook. “Their slant was that gold is a massive bubble...“Though I was amused by their picture of a skull cleverly overlaid onto a bar of gold and their 20-year-old expert rapping on how it would certainly tumble, I wonder if it was the big banks that paid the bill for the murky advertisement or the stockbrokers. When they have to resort to these kinds of advertisements, does that mean they are getting squeezed by the glittery metal? “I wish they'd go play in their paper world and leave us metal boys alone, because I do want my $50.00 an ounce silver... I do.”  “Silver Eagles and Gold Eagles are legal tender in the U.S.,” writes another. “Why not take a salary (or some part thereof) in the face value of those coins. Or conduct a sale in the face value?“Your taxes would only be on the face value. You could even offer your counterparties a discount on the payment. Thoughts?” The 5: Someone beat you to the punch… and the Feds beat him to a pulp, figuratively at least. Nevada business owner Robert Kahre tried paying his employees in Eagles, thinking the same thing you are. He’s now doing 15 years. A jury took only a day and a half to find him guilty last year on all 57 counts he faced for charges ranging from tax evasion to failure to withhold, among other things. [Ed. Note: You can still buy them yourself, however. Despite our "window of exclusivity" having closed yesterday, First Federal still has X in stock and a good deal on the table. If you're interested, take a look here, and keep in mind we have an advertising relationship with the company.]  “Gold at $1,800 next year doesn’t seem that ‘outrageous’ to me,” a reader writes after seeing to our item on Saxo Bank’s “10 Outrageous Predictions” for 2011.The 5: In a typical year, three or four of Saxo’s 10 potential black swans tend to show up… and we asked yesterday which ones you thought were most plausible. Our unscientific tally finds the highest number of readers coalescing around: #6. Crude oil tops $100 a barrel before correcting by one-third #7. Natural gas surges 50% #8. “Currency wars” drive gold to $1,800. Of course, a 50% boost in nat gas would simply bring prices back to year-ago levels. A vocal minority spoke up for No. 1 -- “Congress blocks a Fed attempt at QE3 to bail out banks and local governments.” Heh. That would be a black swan event, for sure.  “When QE2 doesn't work,” one of the vocal minority writes, “and as situations in state and local governments worsen, there will be pressure on the federal government to step in.“We're seeing the genesis of this here in Michigan, where there is a movement afoot to have the state assume all of the debts of, for example, the Detroit Public School District. A bailout, by the state, of the school district. And who will the state turn to?” “They say the s*** runs downhill; well, this just may be one of those examples where it flows up... up from local governments and entities to the states, and then from the states to the federal government. “If that happens, I do think the new Congress will be in quite a pickle! The absurdity of it all certainly should be entertaining. I am glad, however, that I exited all of my VKQ and NIO positions earlier this fall; yes, I missed the top, but avoided the mess that followed.”  “Meredith Whitney expects 50-100 major muni defaults,” adds another. “And there will no doubt be screaming by those in Congress for bailouts. Screw 'em. Let them eat what they have sown.”The 5: Under current law, the only munis the Fed can buy are those of less than six months maturity. But it’s the longer-dated stuff that’s in trouble. Ben Bernanke could assert emergency powers to buy those bonds anyway… but would Congress let him get away with it? No matter the outcome, we don’t want to be hanging around the muni market right now, even if the yields are tax-free. Income investors looking around for better options in 2011 can find some good ones here. Program note: On Jan. 4, 2011, we will be releasing ALL of the Agora Financial 2011 Forecasts to AF Reserve members, along with the specific actions you'll need to take to play each forecast. If you're not a Reserve member, but would like to be, today would be a good time to inquire within. Next week, we'll be offering the Reserve at its current price, for the LAST time. We've added two new services this year and increased the "value" of the Reserve by nearly $1,000 dollars (published price). It's still a great deal and getting better all the time. Call John Wilkinson at (866) 361-7662 to inquire what discounts already apply to your account and to lock in at the premium rate before it goes up. If you call John today, you'll be sure to receive all our forecasts and picks for 2011 in time to kick off the new year! Cheers, Addison Wiggin The 5 Min. Forecast P.S.: In addition to his annual forecast, Breakthrough Technology Alert editor Patrick Cox is putting the final touches on his latest batch of special reports. It took months of feverish research, well-placed phone calls, extended plane trips... late nights and lots of coffee. But the results could make staggering amounts of money for early investors in his best new ideas. Watch your inbox this evening to learn about five “wealth quakes” Patrick sees coming in 2011.
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| Posted: 22 Dec 2010 09:11 AM PST
It is not just the stock market that is at the highest levels since Lehman. Probably just as importantly, NYSE margin debt has surged to $269 billion, an increase of $13 billion from the prior month, and the highest since September 2008 when it was at $299 billion, and subsequently tumbled as investors rushed to get out of all margined positions. And this has happened even free cash credit accounts and credit balance in margin accounts remained relatively flat. In other words, net NYSE available cash decreased by $10 billion M/M to ($34) billion, the lowest since April 2010, just before the market tumbled, and net cash surged by almost $50 billion in two months. We are confident that NYSE cash in November will be at the lowest level of the year, not to mention December, as hedge funds leveraged everything they could, in some cases hitting as much as 3-4x gross leverage, in pursuit of beta, now that unleveraged alpha strategies have ceased to work. Which means that with retail stubbornly missing from the picture, the only beneficiaries of the HFT and Fed facilitated melt up are the 1000 or so hedge funds, where average net worth is in the 6 digits, that will be profitable this year. Everyone else can drown their sorrows in McDonalds fries which are about to surge in price. Of course, what this means should some unexpected credit event occur, is that the forced selling that will follow this two year high margin debt unwind will lead to a comparable results as those seen after the Lehman collapse. For the sake of America, we can only hope that the centrally planning Chairman can sustain the lie for a few more months before the house of cards on the camel's back, which in turn is suspended on a ladder as the eye of the hurricane passes over, finally topples.
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| Posted: 22 Dec 2010 09:06 AM PST "We were received with a hospitality hardly to be equaled…for [Brazil] asks neither who you are nor whence you come, but opens its doors to every wayfarer." – Louis Agassiz and Elizabeth Cabot Cary Agassiz, A Journey in Brazil (1879) I recently spent two weeks in Brazil on a four-city tour – in Campo Grande, Sao Paulo, Florianopolis and finally Rio de Janeiro. What can I say about the experience? I can say that the caipirinha – Brazil's national drink – is a potent cocktail; Brazilian meats are very salty; Brazilian desserts are very sweet. This taste for the extremes of the flavor spectrum extends to Brazil's monetary brand, as well. Today, the Brazilian real is strong (and the dollar is weak). The real is now at a 10-month high against the US dollar (having risen 40% from its lows in early 2009). This prompted the Brazilian finance minister to threaten weakening the real. You've probably heard of his comment about a "currency war." What he fears is that the strong real will...
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| Posted: 22 Dec 2010 09:04 AM PST If Wall Street is the hub of American finance then Las Vegas was the manifestation of credit dreams going viral. Las Vegas, the beating heart of Nevada had a tremendous boom with the real estate bubble because it played into the narrative of making it big. Where else can unknowns strike it big and have their name put up in lights? With Wall Street feeding the frenzy Las Vegas seemed to be an endless playground of free flowing capital. During the boom it was hard not to notice the high end Rodeo Drive like stores of Gucci, DKNY, and Prada covering the floors of many casinos. The stores were full and money seemed to flow like the exhaust of Maserati's cruising up and down Las Vegas Blvd. If heaven on Earth for kids is Disneyland Las Vegas was the heaven of debt. What once seemed as an endless dream has burst into a barren desert nightmare. Las Vegas once boasting some of the fastest growth rates now has largely led Nevada into having the highest unemployment rate of all states in the country. If Michigan was the result of the offshoring of American manufacturing and the demise of the US auto industry Nevada is the exclamation mark at the end of the credit bubble era. You only need to look at the drastic collapse in real estate prices to see how quickly the bubble burst in Nevada:  What took from 1980 to 2000 in terms of price growth was achieved in four years from 2000 to 2004. The rapid rise in Las Vegas was largely due to the real estate bubble, both residential and commercial. The bust in commercial real estate values in Las Vegas was all but set in stone but the bubble grew to a point where many started believing that the mania would last forever: More Here.. 
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| Posted: 22 Dec 2010 09:00 AM PST "We were received with a hospitality hardly to be equaled…for [Brazil] asks neither who you are nor whence you come, but opens its doors to every wayfarer." – Louis Agassiz and Elizabeth Cabot Cary Agassiz, A Journey in Brazil (1879) I recently spent two weeks in Brazil on a four-city tour – in Campo Grande, Sao Paulo, Florianopolis and finally Rio de Janeiro. What can I say about the experience? I can say that the caipirinha – Brazil's national drink – is a potent cocktail; Brazilian meats are very salty; Brazilian desserts are very sweet. This taste for the extremes of the flavor spectrum extends to Brazil's monetary brand, as well. Today, the Brazilian real is strong (and the dollar is weak). The real is now at a 10-month high against the US dollar (having risen 40% from its lows in early 2009). This prompted the Brazilian finance minister to threaten weakening the real. You've probably heard of his comment about a "currency war." What he fears is that the strong real will hurt Brazil's exports by making Brazilian goods more expensive, hence weakening the Brazilian economy. It is a tired line of reasoning. This idea that a country gets rich by destroying the value of its currency is a weed that won't go away no matter how many times you pull it from the soil. What's curious about this notion cropping up in Brazil is that you'd think a Brazilian would appreciate the dangers of weakening a currency. Brazil has had a habit of blowing up its currency over the last 60 years. From 1942 to the present, Brazil went through eight different currencies:
The present-day real is but a teenager, a mere youth sprung from a bad family. Yet it is among the world's strongest currencies today, bolstered by the commodity wealth and strong growth rate of Brazil's economy. Say what you will about the US dollar, which has been a poor currency as far as retaining its purchasing power over time, it's never gotten so bad that we had to start over – at least not yet. Brazil's experience makes the dollar look like a gold standard. It was not that long ago that Brazil's inflation rate hit 2,700%. It happened in one 12-month period from 1989-1990. Even as late as 1999, Brazil was a financial basket case. In 1998 and 1999, its finances were such a mess that Brazil got the biggest IMF rescue package in history up to that point, $41.5 billion. During the 20th century as a whole, Brazil had a cumulative inflation rate of more than a quadrillion percent. If you were a net saver in Brazil and kept that money in Brazil's currency, you lost big. You might as well have set the money on fire. Today, Brazil is in a different position. The currency is so strong, its politicians fret. American travelers find no bargains in the shops of Sao Paulo or Rio. Brazil, too, has huge currency reserves and is now a net creditor, not a debtor. Brazil is even accumulating gold – the real thing. We met with an economist on our trip there who made a presentation that showed Brazil's central bank has 5% of its reserves in gold – and it's been buying more. Today, US investors go out of their way to buy products that give them exposure to Brazilian reais, instead of US dollars. It's incredible when you think how much things have changed in just the last 10 years. Of course, Brazil could screw it up again. There are some worrisome signs. The new president is Dilma Rousseff. She is a former Marxist guerrilla. Captured in 1970, she was beaten and tortured. Hers is a quite a tale. But she has since mellowed out, supposedly. Most see her as simply continuing the policies pursued under former President Lula. But we'll see… As with any emerging market, there are big problems, but also big opportunities. Still, Brazil's economic challenges seem less complicated and smaller than those in the US, where debt and deficits are much larger. And currency screwups are relative. Forced to make a choice, I'd rather bet on the Brazilian real than the US dollar. (But gold is the best currency of all.) Regards, Chris Mayer Is Brazil For "Real?" 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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| GoldMoney Foundation assists new edition of Vieira's 'Pieces of Eight' Posted: 22 Dec 2010 08:24 AM PST 4:18p ET Wednesday, December 22, 2010 Dear Friend of GATA and Gold: With financial support from the GoldMoney Foundation, the magisterial work of lawyer, scholar, and historian Edwin Vieira, "Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution," is being reprinted and offered for sale, with delivery expected to begin in the middle of January. Details and ordering information were posted today at the Internet site of James Turk's Free Gold Money Report here: https://www.fgmr.com/reprinting-of-pieces-of-eight.html CHRIS POWELL, Secretary/Treasurer 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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| GoldMoney Foundation assists new edition of Vieira's 'Pieces of Eight' Posted: 22 Dec 2010 08:24 AM PST 4:18p ET Wednesday, December 22, 2010 Dear Friend of GATA and Gold: With financial support from the GoldMoney Foundation, the magisterial work of lawyer, scholar, and historian Edwin Vieira, "Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution," is being reprinted and offered for sale, with delivery expected to begin in the middle of January. Details and ordering information were posted today at the Internet site of James Turk's Free Gold Money Report here: https://www.fgmr.com/reprinting-of-pieces-of-eight.html CHRIS POWELL, Secretary/Treasurer 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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| Gold Daily and Silver Weekly Charts Posted: 22 Dec 2010 08:20 AM PST |
| Investor ETF Madness hits $1 Trillion Posted: 22 Dec 2010 08:13 AM PST After adding $209Bn (26.3%) in total assets so far this year, the US ETF industry has passed the Trillion Dollar mark led by $31Bn of inflows into fixed income ETFs, of all things as well as $29Bn of inflows into emerging markets, and $21Bn into domestic. Recent outflows have knocked commodity ETFs down to $11.4Bn, miles down from last year’s $32.6Bn inflow – rats leaving a sinking ship, perhaps? That would be very bad news for the firm that bought up 90% of the LME copper supply recently. Do ETF traders really know something or are they a lagging indicator?
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| Posted: 22 Dec 2010 08:11 AM PST
As the fallacy that an economy is improving if the stock market is higher percolates, accompanied by the all too real surge in input costs (yes, oil really is on the verge of breaking $91 first, and then $100), the margin contraction we have been discussing for over 2 months is becoming increasingly acute: for a good recent example nowhere is it more evident than in the latest Philly Fed reading. Yet what is true for manufactured products, is far more applicable for food products, whose input costs are determined by the daily vagaries of millions of speculators. Which means that as the catch 22 of an "improvement" for some courtesy of 3 year highs in the Nasdaq is perceived by the speculators as an actual improvement for all (which would be the case if stocks were owned uniformly by every layer of society, which is certainly not the case), prices will eventually hit the tipping point where retailers will be forced to start passing on cost increases to consumers. Enter McDonalds whos executives according to AGWeb, were quoted as saying that "menu prices could rise if the economy improves." And since after listening to the endless barrage of brainwashing from the mainstream media, one can't not be left with the impression that the economy is doing anything but improving, conveniently ignoring the fact that the Fed is stimulating it coincidentally via QE2, the next step for the broad part of the US population for whom there is no improvement in anything, which would be the majority of America, is about to get its next whopper (pun intended) of a Bernanke side effect, namely inflation in the most affordable of food product categories: fast food. But since this is not caught by the core CPI, all shall be well, and the Fed will be able to proclaim, without losing any sleep, that inflation is truly contained, when the only thing that is contained is lending to those who most need it. As for that critical choice of when and how to pass on food costs, here are additional details of the dilemma gripping food retailers, per AG Web:
For those concerned that the recent resumption in limit up openings in various commodity classes is a worrying development, all we can say is "you are absolutely right to be concerned." Indeed, Bernanke's Gusher of Endless Liquidity gusher (GELTM) is starting to make its way to asset classes far beyond stocks.
And herein lies the rub: those very same surging S&P EPS that are supposed to form the bedrock of the number to which some multiple is applied to get a 1,550 year end estimate if one is David Bianco, are about to plunge as profit margins are hit, while fixed costs refuse to be reduced.
What this means specifically is that pretty soon America can kiss the various iterations of the dollar menu goodbye.
Elsewhere, fast food price hikes have already taken place.... even with 9.8% unemployment.
And so forth. Those interested in the full story can read it here. The bottom line is obvious. As the surge in the stock market continus to be equated, totally incorrectly, with an improving economy, prices will increase inevitably, immediately nullifying any benefit brought from the recent tax extension, and pushing all profits to commodity goods speculators, while taking away purchasing power from end consumers. Keep in mind this is the Fed's plan, which no longer fights disinflation, but is in the inflation creation business. Luckily, Bernanke is 100% certain he can contain this process. It is then too bad it has already started, and is about to get a whole lot worse. h/t Dan
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| Monitoring Takeover Targets In Gold and Silver Junior Mining Stocks Posted: 22 Dec 2010 08:03 AM PST There is a growing scarcity of available precious metal mines in the world. The old majors such Barrick(ABX:NYSE), Goldcorp(GG:NYSE), and Newmont(NEM:NYSE) are facing diminishing reserves in their existing mines. They are mature miners with pockets bulging with cheap dollars. Moreover these majors are competing with the Chinese, Russians, Japanese and Koreans who have all shown an interest in expanding their precious metals assets and diverting assets away from paper currencies into real assets. All of them know it is cheaper to buy growth rather than to find it. They are like the Red Queen in "Alice in Wonderland", who must take two steps forward just to stay in the same place.
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| Is A Police State Worth Fighting For? Posted: 22 Dec 2010 07:53 AM PST In 43 BC, over 2,000 years ago, warring consuls Antony, Lepidus, and Octavian were duking it out with each other over control of Rome following Julius Caesar's assassination the prior March. Each had legions at his disposal, and Rome's terrified Senate sat on its hands waiting for the outcome. Ultimately, the three men chose to unite their powers and rule Rome together in what became known as the Second Triumvirate. This body was established by a law named Lex Titia in 43 BC. The foundation of the Second Triumvirate is of tremendous historical importance: As the group wielded dictatorial powers, it represented the final nail in the coffin in Rome's transition from republic to malignant autocracy. The Second Triumvirate expired after 10 years, upon which Octavian waged war on his partners once again, resulting in Mark Antony's famed suicide with Cleopatra in 31 BC. Octavian was eventually rewarded with nearly supreme power, and he is generally regarded as Rome's first emperor. Things only got worse from there. Tiberius, Octavian's successor, was a paranoid deviant with a lust for executions. He spent the last decade of his reign completely detached from Rome, living in Capri. Following Tiberius was Caligula, infamous for his moral depravity and insanity. According to Roman historians Suetonius and Cassius Dio, Caligula would send his legions on pointless marches and turned his palace into a bordello of such repute that it inspired the 1979 porno film named for him. Caligula was followed by Claudius, a stammering, slobbering, confused man as described by his contemporaries. Then there was Nero, who not only managed to burn down his city, but was also the first emperor to debase the value of Rome's currency. You know the rest of the story – Romans watched their leadership and country get worse and worse. All along the way, there were two types of people: The first group was folks that figured, "This has GOT to be the bottom; it can only get better from here." Their patriotism was rewarded with reduced civil liberties, higher taxes, insane despots, and a debased currency. The other group consisted of people who looked at the warning signs and thought, "I have to get out of here." They followed their instincts and moved on to other places where they could build their lives, survive, and prosper. I'm raising this point because I'd like to open a debate. Some consider the latter idea of expatriating to be akin to 'running away.' I recall a rather impassioned comment from a reader who suggested, "leaving, i.e. running away, is certainly not the proper response." I find this logic to be flawed. While the notion of staying and 'fighting' is a noble idea, bear in mind that there is no real enemy or force to fight. The government is a faceless bureaucracy that's impossible attack. People who try to do so usually discredit their argument because they become marginalized as fringe lunatics. Violence is rarely the answer, and it often has the opposite effect as intended, frequently serving to bolster support for the government instead of raising awareness of its shortcomings. Unless/until government paramilitaries start duking it out with citizen militia groups in the streets, this is an ideological battle…and it's an uphill battle at best. Government-controlled educational systems institutionalize us from childhood that governments are just, and that we should all subordinate ourselves to authority and to the greater good that they dictate in their sole discretion. You're dealing with a mob mentality, plain and simple. Do you want to waste limited resources (time, money, energy) trying to convince your neighbor that s/he should not expect free money from the government? You could spend a lifetime trying to change ideology and not make a dent; people have to choose for themselves to wake up; it cannot be forced upon them. And until that happens, they're going to keep asking for more security and more control because it's the way their values have been programmed. When you think about it, what we call a 'country' is nothing more than a large concentration of people who share common values. Over time, those values adjust and evolve. Today, cultures in many countries value things like fake security, subordination, and ignorance over freedom, independence, and awareness. When it appears more and more each day that those common values diverge from your own, all that's left of a country are irrelevant, invisible lines on a map. I don't find these worth fighting for. Nobody is born with a mandatory obligation to invisible lines on a map. Our fundamental obligation is to ourselves, our families, and the people that we choose to let into our circles…not to a piece of dirt that's controlled by mob-installed bureaucrats. Moving away, i.e. making a calculated decision to seek greener pastures elsewhere, is not the same as 'running away'…and I would argue that if you really want to affect change in your home country, moving away is the most effective course of action. The government beast in your home country feeds on debt and taxes, and the best way to win is for bright, productive people to move away with their ideas, labor, and assets. This effectively starves the beast and accelerates its collapse. Then, when the smoke clears, you can move back and help rebuild a free society. Regards, Is A Police State Worth Fighting For? 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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| Wednesday’s Worry – ETF Madness hits $1,000,000,000,000 Posted: 22 Dec 2010 07:31 AM PST
Wednesday’s Worry – ETF Madness hits $1,000,000,000,000
After adding $209Bn (26.3%) in total assets so far this year, the US ETF industry has passed the Trillion Dollar mark led by $31Bn of inflows into fixed income ETFs, of all things as well as $29Bn of inflows into emerging markets, and $21Bn into domestic. Recent outflows have knocked commodity ETFs down to $11.4Bn, miles down from last year’s $32.6Bn inflow – rats leaving a sinking ship, perhaps? That would be very bad news for the firm that bought up 90% of the LME copper supply recently. Do ETF traders really know something or are they a lagging indicator? “There is little doubt that money chases performance, so the bedrock for significant (ETF asset) growth is clearly a continuing move higher for risk assets,” said Nicholas Colas, chief market strategist at ConvergEx Group. He added that growth for ETF assets would essentially be a “tug of war” between hedge funds and retail investors. “As retail investors grow more confident in a continued rally in risk assets, they will shift capital from cash to equity ETFs,” said Mr Colas, who described growth for equity focused hedge funds as the “other side of the growth coin” for ETFs. Mr Colas noted that hedge funds tended to use ETFs on the short side which was negative for asset growth. He said that as hedge funds expanded their equity trading books, a growing portion would come from ETF short sales. “This will come through as ‘supply’, dampening demand for new shares.” Barry Ritholtz ponders the end game of the ETF madness and concludes that soon there will be more ETFs than ever:
As you can see from the chart on the right, ETFs are, generally, better than Mutual Funds from an expense perspective but some ETFs, particularly utlra-ETFs and commodity ETFs churn those fees over and over as they constantly roll their positions and that leads to inefficiencies that can really damage your returns over time. Take a look at oil vs. USO – a 10% divergence over just 200 days. Drag the days out longer and see what happens to the tracking… Go out 600 days and you’ll see that, since the crash in March 2009, USO has diverged in performance from oil by over 100%. That’s why we like to short USO – over the long run, it’s a pretty good bet! Not all ETFs are poor trackers, GLD tracks physical gold very well and always has while DIA diverges from the Dow by 2% over 200 days – but to the upside! That’s an indication of how enthusiastically investors are piling into index ETFs. Since the crash, DIA has outperformed the Dow by 10% – now THAT’s an ETF! We had shorted DIA because I expected it to "true up" into the end of the year but no such luck as they keep flying. Bottom line – use these charts to look at your ETFs before you buy – it will help you avoid the lemons, like USO, that are out there. The real problem with having $1Tn worth of US ETFs out there (and who knows how many foreign ETFs are holding US equities?) is that, as happened in 2008, should investors begin cashing out, they will create waves of indiscriminate selling – just as we currently have waves of indiscriminate buying. If you wonder what kind of idiot would own NFLX at $186 – it’s probably you, as well as me, as we probably have some 401K or IRA that’s tracking the S&P or the Nasdaq and NFLX is in both. I mentioned in yesterday’s post that we’d be shorting NFLX once the Cramericans were done piling in and we had a trade in yesterday’s Morning Alert that’s ready to go now but I also like selling the WEEKLY $185 puts for $1.85 and buying the Jan $170 puts for $3.40 as the delta differential is only .19 and you have the very great advantage that the weekly puts expire tomorrow. Since the Jan $165 puts can be sold for $2.35, the plan is to roll down to a vertical if NFLX dips below $184 before the expiration but, otherwise, it should be a nice, profitable 1-day trade. NFLX is being pumped up daily by CNBC and I’m counting on them to hold it for another day, of course. I was going to go off on CNBC this morning but Gary A wrote such a great article on HubPages that I have nothing more to add other than: you should really read this post. The first Cramer video is very apropos as I thought it was yesterday’s show but it turns out it was from June of 2008, when the S&P was also at 1,250 and there’s Jim picking the same stocks at about the same levels for the same reasons he’s picking them today – very funny (unless you followed his advice in June of 2008, of course).
Asia was flat this morning and the good news is the FTSE gained 60 points (1%) after the open but the bad news is they opened down 1% so Europe is flat as well. Since a single person now holds $3Bn of the LME’s $3.3Bn worth of copper – there doesn’t seem to be much point in watching that for any kind of real economic indication and we already know oil is a manipulated joke with an hysterical 305M barrels on order for February delivery even though when January closed on Tuesday, just 18Mb were left with 114Mb worth of contracts canceled in 5 days of trading (90% seems to be about the right level of fake demand by speculators that’s ballooning the commodity markets in general) - just as I predicted on Thursday, the 16th. We did very well shorting oil off that $89 line for the week but that’s over now as we have to wait for a new channel to form while the February contract cycle tops out. Not hard, you just have to be patient… We had a great run into last year as well and it didn’t have a happy ending but it did last until options expiration day on January 18th. As I pointed out to Members in last night’s Chat, if this is the beginning of a rally to S&P 1,550 or even 1,450 – we’re not missing much by sitting on our hands at 1,250 and we did have plenty of long plays last week so now we’re just waiting to see if the breakout sticks. Interestingly, we remained bearish last year because the Dow could not break my 11,539 target in January and yesterday they finished right at 11,533 so it only took them a year to confirm the breakout (or form a nasty, long-term double top, of course). Gang of 12 Member DB said the US economy would grow 6% in 2010 on Jan 14th and we went into that weekend bearish with Monday being Martin Luther King Day and that Tuesday, the 19th, I warned that the markets were "shell-shocked" and unable to hear bad news or, in the very least "comfortably numb." Here’s what happened next:
Like Cramer, I could almost say the same exact thing I said last year now and for pretty much the same reasons and, like Cramer, I would have pretty much the same fool saying the exact opposite as I am at the same time. I wonder who will "win" this round? In "news for the numb" this morning we have US GDP at 2.6%, less than one-half of DB’s prediction for the year yet we’re STILL at 11,500 on the Dow. We also have Q3 Corporate Profits off a whopping 25% of estimates at 2.4% (vs. 3.2%) yet we’re STILL at 11,500 on the Dow and MBA Mortgage Applications fell 18.6% this week after falling "just" 2.3% last week despite the fact that the 30-year rate flatlined at 4.85% yet we are STILL at Dow 11,500. Existing Home Sales are at 10am but it must be hard to buy a home without a mortgage and we also get the FHFA Housing Price Index at 10 and then Oil Inventories at 10:30. Be careful out there! - Phil
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| IMF Completes 403.3 Tonne Gold Sales Program Posted: 22 Dec 2010 07:19 AM PST "Vietnamese seek safety in gold as currency wobbles. Writing on the Wall -- Hyperinflation Is Very Near: James Turk. Silver analyst Ted Butler has a must read essay. Serious Problems Ahead for the British Pound: James Turk... and much more. " Yesterday in Gold and Silver With the holiday season almost upon us, price volatility has almost vanished... along with trading volume. Gold had a bit of a spike that began a few minutes before the New York open in Tuesday's trading... but that bit of positive excitement vanished quickly, as an ever-vigilant not-for-profit seller showed up about an hour later and took back that gain, plus a few dollars more. The gold price recovered a bit... and closed virtually unchanged from Monday. You could be forgiven if you thought that the silver chart looked like a carbon copy of the gold chart... complete with the price spike/take-down at the same times. Silver had a price range of almost 60 cents during early morning trad...
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| IMF gold sale completion – out with a whimper Posted: 22 Dec 2010 07:06 AM PST by Lawrence Williams What the sale does represent is a sea change in gold demand if current patterns continue. A number of Central Banks have been quietly, or overtly, increasing their gold holdings, in part of what they see as the likely fall in value of the U.S. dollar, the Euro and the pound sterling in global markets given the huge increases in money supply generated by Quantitative Easing programmes. … although it has also become apparent that some countries may well be hiding the actual extent of their purchases by not placing the gold into their official reserve figures so as not to cause an excessive rise in the gold price. Gold represents a tiny proportion of global monetary activity and news of say a Central Bank increasing its holdings by 100 tonnes or more could have a very strong impact on price. As it is we did see this happen when India purchased almost half the IMF gold (200 tonnes) on offer in a single purchase back in October (announced in November) last year. There was much speculation that China would step in and buy the rest, but as China is now the world's largest gold producer, and all its mined gold has to pass through official channels, there is plenty of scope for the country to hold on to this in non-reportable accounts until it chooses to make this public. If this is indeed the case, perhaps borne out by the big rise in Chinese gold imports in the past year to meet public demand for the metal, then a large hunk of the world's mined gold is just not entering the market at all, which puts another angle on perceived availability of gold to satisfy overall global demand. … it is also notable that some bigger nations, of which Russia and Saudi Arabia are perhaps the most significant, have also boosted their announced reserve figures fairly substantially over the period. … Now the U.S. public is again beginning to be much more wary about the end of the recession, and markets live or die on confidence, and with the pouring of money into the economy seeming to have little impact on the man in the street (but has been good for the stock market investor), 2011 could be the year when the chickens come home to roost with U.S. Cities and States facing default and/or bankruptcy. These are almost certain to lead to more government bailouts, cutbacks in public service employee numbers on a scale already being seen in similarly affected European nations and a grim year or so ahead of us. QE may help keep the dismal realities less visible, but the more new money governments pump out, the more the prospects of serious inflation ahead — and inflation coupled with rising unemployment, which seems to be the most likely scenario, is a disaster waiting to happen. Gold may be the only real wealth protector in such a happenstance. [source]
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| How to Spot the Top of the Gold Market Posted: 22 Dec 2010 07:00 AM PST By Chris Weber, editor, The Weber Global Opportunities Report Wednesday, December 22, 2010 I recently read an article about the famous Aden sisters in BusinessWeek. Something Mary Anne Aden said in it really struck a chord with me. In the midst of showing the generally fantastic track record of the Adens, they talk about their "biggest goof": how they stayed bullish on gold in the early 1980s. "We were new to the game," said Mary Anne. "We were feeling enormous pressure from our subscribers to stay bullish." I remember those years well. Even though it was clear to me in early 1980 that the huge precious metals bull market was over, no one – and I mean no one – wanted to hear this. I didn't have a newsletter in the early 1980s, but I bet you that if I did and if I advised readers to switch from gold and silver into Treasury bills and then bonds, I would have gotten a lot of anger and cancelled subscriptions. I'm bringing this up because that's e...
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| Posted: 22 Dec 2010 07:00 AM PST Carlos X. Alexandre submits:c It appears that every time Gold’s value is questioned, the mob is out in force wanting to crucify someone as if a sacrilege has been committed. It’s reminiscent of 2005 when everyone was getting a real estate license because the holy grail had been uncovered, and no one should dare interfere with the path to riches, for common sense was “passé” and housing was the newly discovered goose that laid the golden eggs. Whether gold is a bubble or not, is truly irrelevant to some of us, because we only view the metal as a commodity that can be traded, and unlike other commodities, it has a unique trait: it’s not consumed. We eat wheat, burn oil, even discard copper — but not gold! The global gold inventory, not necessarily supply, only grows and never shrinks, unless someone forgets where he buried his gold coins, or misplaced a wedding ring before going to a bar. Complete Story »
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| LGMR: Gold Flows to China Rise Sharply (and Early) Ahead of New Year Posted: 22 Dec 2010 06:59 AM PST London Gold Market Report from Adrian Ash BullionVault 22 Dec., 08:45 EST Gold Flows to China Rise Sharply (and Early) Ahead of New Year as Savers Reject Negative Bank Interest Rates WHOLESALE PRICES for gold moved sideways around $1390 per ounce in London on Wednesday morning, little changed as world stock markets also held flat but crude oil crept above $90 per barrel. Silver bullion traded inside this week's tight range below $29.50 per ounce. A senior bullion logistics executive in Switzerland yesterday told BullionVault that shipments of gold to China are running much higher – and have begun much earlier – to meet consumer demand for the Chinese New Year, which will start on 3rd Feb. 2011. "Policy makers should allow more flexibility of the Yuan to help ease imported inflation," the People's Daily today quotes politburo researcher Ba Shusong, who forecasts a possible 6% rise in consumer prices year-on-year in 2011, but says that raising interest rates to combat infla...
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| Posted: 22 Dec 2010 06:38 AM PST
I was sleeping like a rock last night, having one of those great flying dreams. I dove, rolled, and looped through the clouds, and soared with the eagles, my arms stretched out like wings. The phone rang. I looked at the clock. It was 2:00 am. What else was new? After 40 years in the business, I seemed to have developed a supercharged internal adrenaline pump that jolts me into full combat mode in seconds, firing on all 16 cylinders. Such is the life of a global macro long/short hedge fund manager. It was my friend, Ming, at the People’s Bank of China in Beijing. They had just raised reserve bank requirements by 50 basis points, and another interest rate hike was in the works. Leaks of the impending move had prompted traders to dump holdings of commodities, energy, and precious metals, expecting the move to cool economic growth by the Chinese economic juggernaut. This is why silver (SLV), (AGQ) dove from $30.60 to $28 in recent days, and gold (GLD) backtracked from $1,430 to $1,374. The wheels whirred away in my mind, calculating how this news would impact my trading book, which was long US stocks (SSO) and financials (BAC), (XLF), and short Treasury bonds (TBF), (TBT) and the yen (YCS). I concluded that I was perfectly positioned, and that my longs should go up and my shorts would go down. Back to soaring with the eagles. I was just coming out of a white fluffy cloud when the phone rang again. It was 4:00 am. A friend at bond investment giant, PIMCO, in San Diego, CA was calling to tell me that they were upgrading their growth forecast for 2011 from an anemic 2.0%-2.5% range to a more virile 3.0%-3.5%. The rerating was off the back of the back of the tax compromise between the President and the Republican leadership, and the massive, short term government stimulus that was working far better than imagined or publicized. If there is one guy who’s every word I hang on, it is PIMCO’s eclectic managing director Bill Gross. This is not just because he was an ex-hippy, former Vietnam War swift boat veteran, who worked his way through college counting cards at blackjack in Las Vegas at the same time I did. We may well have sat at the same tables (play the videotape!). I think Bill and his cohorts, Mohamed El-Erian and Paul McCulley, are one of a tiny handful of people who have nailed it with their understanding of the global economy and the consequences for financial markets and asset classes. So we are usually reading from the same sheet of music. I could see this easily leading to a round of competitive upgrades of forecasts by other financial institutions as we run into year end. Needless to say, this is a hugely positive backdrop for stocks. The wheels whirred again, popping out the same conclusion. If anything, my trading book looked even better. It was too late to soar with anymore damn eagles, so I staggered out of bed to do some flying of a different sort. I checked prices, and was reassured that the markets agreed with my analysis. It wasn’t until noon that I realized that in the dark I had put on my boxer shorts backwards. To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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| The Details Of The CitiFX Contrary Call For A Watershed Bear-Market 2011 Posted: 22 Dec 2010 06:30 AM PST
The report making the rounds today comes from CitiFX' Technical group which goes against the Wall Street conventional wisdom and instead of a 1,550 on the S&P forecasted by discredited permabull David Bianco, expects to see the market drop 16% by the end of next year. The punchline is that "the peak may be posted as early as the opening days of January 2011 (possibly even 3rd January as per the other 3 examples) with a down month in the region of 5%." And if a down 5% January is not enough, the firm believes that based on historical precedent, we will also see a 20% intrayear drop, and close the year 16% down. The catalysts: i) The bond market falling sharply as it did in 1977 sending yields higher and fueling inflation or supply fears or both, and ii) Europe imploding. While this could stress our view on the dollar fixed income and commodities, this dynamic still supports our bearish equity view. The report's conclusion may prove to be very prescient: "Happy holidays, get some rest. You may need it." On the other hand, with the Fed now practically solely responsible for risk asset pricing, we would not be surprised to see the Dow end 2011 at 36,000.... of course as gas hits $36/gallon, but that's irrelevant. Wealth effect forever! Citi's two catalysts:
Incidentally, one of these (Europe) is precisely what Scott Minerd called for in his outlook for the next 12 months. It is the lack of the other, which goes hand in hand, in Guggenheim's forecast, that made us have a little fun at Scott's expense. Incidentally, this is the same Tom Fitzpatrick who in August 2007 called for a 1987-type sell off in 2008, and uttered the following prophetic phrase: "without the Bernanke PUT we may have to entertain the idea of the Bernanke crash." Well, Tom was spot on with his call... and got way more than he bargained for. Full report below:
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| Volatility Set to Pick Up in the New Year Posted: 22 Dec 2010 06:14 AM PST By Captain Hook, Treasure Chests The markets are so manipulated these days that it's becoming increasingly difficult to gauge just what effect increasing interference is having, knowing in general all unnatural stimuli have decreasing impact the longer and more they are applied. Perhaps the best example of this at present comes from the bond market, where in spite of QE2 and a generous POMO schedule (every day now) that looks set to run in perpetuity, bond prices are falling. In this regard you should know US long bonds (and 10-Year Treasuries) are in jeopardy of signaling a secular trend change with a bearish five-wave pattern lower, which is why so many are now looking for another crash in real estate. We will let you know when such a signal in the bond market is triggered. But lack of monetization is not the only reason bonds are falling. They are also falling because fundamental market sentiment is shifting as more and more people put two and two together on the increased deficits an extension of the Bush tax cuts will lead to, putting the US government on a collision course with bankruptcy only a few years down the road. So it looks like it's do or die time for the bureaucracy. It's either austerity or higher interest rates due to the inflation increasing monetization will create – and bond markets around the world finally appears ready to recognize this reality. What's more, with Bernanke still running the Fed little doubt exists as to what he will do (monetize more), making it almost a forgone conclusion the bond market will actually need to blow up before one can ever expect to see responsible policy. And the manipulation doesn't end there, with stock futures jammed higher every day, and commodities (especially precious metals) suppressed. Trade over the past few days tells the story in this regard, where like clockwork the bureaucracy's price managers take advantage of the optimistic idiots who must buy banker derivatives in greedily attempting to maximize profits from an anticipated move higher in gold and silver. (As opposed to buying physical, which I have been a proponent of for many years.) This is naturally why open interest put / call ratios across the sector remain in the tank (discussed in our last commentary), which enables price management of precious metals to be effective. It should be noted the ratio for SLV has started to move back up again however, which could give price managers and bears some unexpected angst next week as expiry approaches. This is of course the mechanism the bureaucracy's price managers use to keep gaming the stock market(s) higher, where elevated US index open interest put / call ratios are a sign sufficient numbers of traders are short and bearish, making them vulnerable to a squeeze no matter how many times this has occurred previously or how overbought technical conditions may be. If you are a trader and are stupid enough to be short or long puts going into an options expiry with open interest put /call ratios at generally elevated levels, as is the case right now, you can rest assured a squeeze play will be attempted, given when conditions are as overbought as they are now (and ratios mixed), the sustainability of such actions become increasingly fleeting. Therein, the squeeze play overnight right into the face of an intensifying bond market rout and Chinese rate hike rumblings could witness a nasty reversal. Be that as it may, and although chop in stocks could last into next week, based on a look at the trade pattern in the CBOE Volatility Index (VIX), pictured below, any such weakness should be temporary. As per the US index open interest put / call ratio analysis attached above, enough shorts likely exist to arrest any such weakness as we push into next week. And if that's not enough, the week after is a Christmas holiday shortened week where price managers are sure to take advantage of low volumes to jam prices higher, so whatever you do, don't go into the holidays short or you might be run over by Santa Claus and his reindeer as they rally stocks into year's end. Here, we will be looking for both the VIX and VXO (I used the VXO as you can see the diamond structures better) to hit 15 over the Christmas holidays, and then volatility should pick up in the first week of January, just like in the year 2000. (See Figure 1) Figure 1
In support of this thinking, the monthly VIX plot from the Chart Room pictured below shows good support should be found at 15 as well. So again, barring a hyperinflationary sequence that takes stocks to the moon and causes 15 on the VIX to crack on the downside, the theory is one should fade the market aggressively when the VIX hits 15, not that efforts on the part of the bureaucracy's price managers won't produce violent swings during the first quarter of next year, possible entailing new price highs, again, as was the case in the year 2000. Therein, if enough shorts are in the market running into the March options expiry, you can bet on such an outcome, especially if the dollar ($) remains vulnerable. (See Figure 2) Figure 2
The fact the $ is not rallying more now with US yields rising the way they are is testament to the bureaucracy's determination to keep things glued together over the Christmas holidays, in line with our thinking above. Again, come next year however, this will all change and volatility will pick up, likely starting in the first week of January. So short sellers / traders get ready, because if we get a supportive sentiment shift post options expiry this month, of which you would promptly be appraised, next year could offer some excellent opportunities. Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. As you will find, our recently reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts, to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented 'key' information concerning the markets we cover. And if you are interested in finding out more about how our advisory service would have kept you on the right side of the equity and precious metals markets these past years, please take some time to review a publicly available and extensive archive located here, where you will find our track record speaks for itself. Naturally if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line. We very much enjoy hearing from you on these matters. Good investing and best of the season all. Captain Hook The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Thursday, December 9th, 2010. Copyright © 2010 treasurechests.info Inc. All rights reserved. Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests. Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. We are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.
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| Is There Any SNB Out There? Eurostoxx' Head Deep In Koolaid Posted: 22 Dec 2010 06:12 AM PST
From Nic Lenoir of ICAP We have already discussed at length European sovereign spreads, the cost of keeping the PIIGS in the eurozone, the inevitable break-up down the road of the EMU, and how EURCHF is ratting out major stress in the system at a time when everybody is trying their best to look the other way. Today adding to our arsenal of charts highlighting the build of massive distortions in the system, I look at EURCHF against Eurostoxx. A friend of mine sent a chart that got me thinking about quantifying the distortion between the two. In order to compare apples to apples, I compared the 1-month % change of both EURCHF and Eurostoxx normalized using their respective volatility. Basically I divide the 1M % change in Eurostoxx by the VDAX index (equivalent of VIX for the Dax) and multiply it by 100. For EURCHF I use the annualized volatility implied by 1M options.
First looking at the two from 2006 to the end of 2008 we realize that is it EXACTLY the same trade! Not really surprising but it is the most convincing graphical representation of this secular relationship. Then came 2009 and central bank intervention, and correlations or logic became completely obsolete. Just like for the higher bonds / higher stocks trades we entered a new era of market logic (or lack thereof in the case of EURCHF and Eurostoxx). We saw Eurostoxx rally despite the credit degradation in European sovereigns on the back of quantitative easing in the US and inventory rebound, while EURCHF reflected the flight out of EUR into CHF. Then as equity markets caught up to reflect the degradation in credit space the SNB held EURCHF up! By the time the SNB gave up on holding down the Swiss France artificially stocks started rallying but FX plunged anyways celebrating the SNB's capitulation. The result is a massive increase in the volatility of the spread between the two markets (after normalization to adjust for respective volatility levels).
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| If only Bloomberg believed in a transparent gold market too Posted: 22 Dec 2010 05:35 AM PST Bloomberg Sues ECB to Force Disclosure of Greece Swaps By Elisa Martinuzzi and Alan Katz http://www.bloomberg.com/news/2010-12-22/bloomberg-sues-ecb-to-force-dis... Bloomberg News filed a lawsuit against the European Central Bank, seeking the disclosure of documents showing how Greece used derivatives to hide its fiscal deficit and helped trigger the region's sovereign debt crisis. The lawsuit asks the European Union's General Court in Luxembourg to overturn a decision by the ECB not to disclose two internal documents drafted for the central bank's six-member executive board in Frankfurt this year. The notes show how Greece used swaps to hide its borrowings, according to a March 3 cover page attached to the papers obtained by Bloomberg News. ... 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. ECB President Jean-Claude Trichet withheld the documents after the EU and International Monetary Fund led a 110 billion euro bailout ($144 billion) for Greece. The dossier should be disclosed to stop governments from employing the derivatives in a similar way again and to show how EU authorities acted on information they had on the swaps, according to the suit, filed by Bloomberg Finance LP, the parent of Bloomberg News. The EU is dependent "on member states taking an open and transparent approach in relation to their levels of debt," Bloomberg said in its suit. "If Greece has failed to take such an approach in the past, there is a compelling public interest in relevant information being disclosed." An ECB spokeswoman declined to comment on the lawsuit, which is based on the EU's freedom-of-information rules. The ECB case follows a 2008 lawsuit by Bloomberg LP seeking disclosure of the U.S. Federal Reserve's records on emergency lending under the U.S. Freedom of Information Act. A group of banks is appealing to the Supreme Court over lower-court decisions ordering the Fed to identify loan recipients. "Bloomberg is committed to transparent markets all over the world," said Matthew Winkler, editor-in-chief of Bloomberg News. "Decisions made behind closed doors helped contribute to the global economic havoc of the last few years. Money flees secrecy and unanswered questions undermine the financial system and give some participants an unfair advantage. Confidence in markets grows with information," he said. "Bloomberg wants the ECB, as well as the Federal Reserve and other financial institutions around the world, to end this damaging opacity." The Greek government didn't originally disclose the swaps, designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. Eurostat, the EU's statistics agency, said last month the swaps added 5.3 billion euros to the country's debt, without giving details. Repeated revisions of Greece's national accounts, beginning last year, spurred a surge in borrowing costs that pushed the country to the brink of default and triggered a region-wide debt crisis. The ECB must consider demands for access to public documents under a March 2004 EU directive. Individuals and companies can then appeal to the European Ombudsman, which reports to the European Parliament, and the European Court of Justice. "The information contained in the two documents would undermine the public confidence as regards the effective conduct of economic policy," Trichet wrote in an Oct. 21 letter, turning down Bloomberg's request for the documents. Disclosure "bears, in the current very vulnerable market environment, the substantial and acute risk of adding to volatility and instability." ECB officials first spotted "a swap operation in unusual terms" in April 2009, seven months before the Greek crisis erupted, according to the March 3 cover note. "It is wholly unclear what (if anything) the ECB did at that time to investigate further," Bloomberg's suit says. "Disclosure would help prevent these situations repeating themselves," said Michael Spence, winner of the Nobel Prize for Economics in 2001 for his research on asymmetric information in markets. "It's a tough call. Not everything can be disclosed, but markets need to know." Greece entered into a "large" number of private, off- market swaps from 2001 through 2007, Luxembourg-based Eurostat said in a report on Nov. 15. The agreements, which led to higher debt, were analyzed "in detail," Eurostat said. A follow-up report on Greek data including swaps is due in weeks, a spokesman said at the time. "We entered the European Union with great effort," George Petalotis, a Greek government spokesman, told reporters in Athens today. "We don't tolerate anyone doubting that. Whoever possesses different evidence can bring it out." 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(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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| Is Your Gold Worth the Paper it's Printed on? Posted: 22 Dec 2010 05:31 AM PST Ben Davies, CEO of U.K.-based Hinde Capital, a marketer of physical gold, has been warning that because there isn't enough gold to keep all those promises, we could be looking at the next big financial bubble. This one could be even worse than the real estate fiasco because gold effects the purchasing power of the world's major currencies.
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| We Are Now Paying for the Destruction of the US Dollar and Economy… Literally Posted: 22 Dec 2010 05:26 AM PST
We just hit another milestone in insanity.
I’ve written before that thanks to its QE lite and QE 2 programs, the Fed is now officially the single, largest owner of US debt. However, even that nonsense pales in comparison to the Fed’s latest accomplishment, that of owning over $1 TRILLION in US debt.
That’s right, as of yesterday afternoon the Fed now owns over $1 trillion in US debt. This amounts of over 7% of the US’s total debt, own by our central bank.
Now, many commentators have pointed out the various ways in which this policy has endangered the US’s balance sheet, economic clout, and currency. However, there’s one element that NO ONE seems to have picked up on. That is…
You, me, and everyone else in the US, is now PAYING the Fed for its insane, anti-Middle class policies.
Remember, we are continually paying the debt via interest payments drawn up from tax receipts. Thus, by buying up US Treasuries, the Federal Reserve is in effect reaping interest payments from the US populace.
Now, consider that none of us had any say in the Fed’s policies, nor the appointment of our esteemed Fed Chairman, Ben Bernanke. None of us voted for him. None of us influenced his policies. And, at this point, virtually none of us approve of what he’s doing.
But ALL of us are NOW paying him and the Fed for doing it. In fact, because the Fed is officially the single, largest owner of US debt, the Fed is, in effect, raking in more money from our debt situation than ANYONE else on the planet.
Thus, we are paying LITERALLY for the insane policies of the US Federal Reserve. Never mind abstract arguments of “paying” for the Fed’s mistakes in the sense of the US Dollar collapsing or the US’s economy imploding. We are LITERALLY paying BILLIONS in interest payments to the Fed.
This in turn means we are:
1) Helping the Fed to continue destroying the US Dollar 2) Funding the Fed’s bubble-blowing efforts 3) Financing the very same policies that have eviscerated the Middle class and retirees
Given that we have no vote or say in the Fed’s actions, I know of only one way to deal with this situation and that’s to buy assets that will maintain their purchasing power and produce REAL returns to counteract the Fed’s anti-Dollar policies.
Good Investing!
Graham Summers
PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.
PPS. We ALSO publish a FREE Special Report on Inflation detailing three investments that have all already SOARED as a result of the Fed’s monetary policy. You can access this Report at the link above.
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| Oil breaks $90, copper prices surge Posted: 22 Dec 2010 05:24 AM PST By Laurie Segall Crude inventories fell by a higher-than-expected 5.3 million barrels from the week prior. Analysts surveyed by energy research firm Platts had expected the stockpile to fall by 2.4 million barrels. Oil prices haven't settled above $90 a barrel since October of 2008. Copper prices also hovered near record highs. The metal is up nearly 30% this year. … Copper is an important commodity for China. "It's a building block for the development we are seeing in China," said Catherine Virga, director of research at CPM Group. "It's used to build out their electrical grid." … China's economy consumes around 35% to 40% of the world's annual copper output. A report in the Wall Street Journal suggesting that a single trader owned 80%-90% of copper at the London Metal Exchange Warehouse also factored in to the rising prices. "We're likely seeing that had some effect on the market because demand elsewhere is pretty soft," Vigra said. [source] RS View: While one can calmly ponder what John Locke might think about that single trader's position in copper, we can only shudder to think of the vitriol Charlie Munger should uncork if questioned on the matter. Perhaps it would spark a rethink/epiphany on Munger's view over the rationality and moral superiority of choosing gold (uniquely) for any such tangible accumulation as a means of building & consolidating wealth.
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| Posted: 22 Dec 2010 05:23 AM PST
Treasuries' Worst Drop in 2010 Driven by Central Bank Sales: Chart of Day Central banks outside the U.S. sold Treasuries at the end of November and in December for the first time since June, spurring the biggest monthly loss in a year for the government securities. The CHART OF THE DAY graphs Treasuries held at the Federal Reserve by foreign central banks and governments. It also shows U.S. 10-year yields climbing in December to a seven-month high. So-called custody holdings rose to a record $2.611 trillion on Nov. 17, according to the U.S. central bank. The figure dropped $2.25 billion in the last week of November, and foreign official holders have sold $1.5 billion of Treasuries in December. "Foreign central banks have dramatically slowed their buying of Treasuries," JPMorgan Chase & Co. analysts led by Srini Ramaswamy in New York wrote in a report Dec. 17. "This sharp decline in foreign demand likely contributed to the selloff in Treasuries," according to JPMorgan, one of the 18 primary dealers required to bid at the government debt sales. Treasuries handed investors a 2.0 percent loss this month, according to Bank of America Merrill Lynch indexes. The last time U.S. government debt fell more was in December 2009, when it dropped 2.6 percent. Investors outside the U.S. hold about half of the nation's marketable debt, which has grown by more than 50 percent since the start of 2009 to $8.75 trillion.
Jim Sinclair's Commentary Please check out Bill Carleton's newest music video, "That's Why (I'm Mining Gold)" This song was written and performed by Bill and is the story of when I got out of gold and went to Alaska with two friends to walk around Ophir.
Jim Sinclair's Commentary Anything they wish to sell is bid for. UPDATE 1-IMF says completes 403.3 tonnes gold sales program WASHINGTON Dec 21 (Reuters) – 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.
Jim Sinclair's Commentary Here is an excellent comment on the End Game question asked about gold. Imitation remains the greatest of compliments.
Jim Sinclair's Commentary Of course they will as soon as no more drama is required for the euro short play. Self-righteous Germany must accept a euro-debt union or leave EMU If Germany and its hard-money allies genuinely wish to save the euro – which is open to doubt – they should stop posturing, face up to the grim imperative of a Transfer union, and desist immediately from imposing their ruinous and reactionary policies of debt deflation on southern Europe and Ireland. One can sympathise with the German people. Their leaders in the 1990s told them "famine in Bavaria" was more likely than the preposterous suggestion that Germany might have to bail out countries as a result of EMU. But events have moved on and, rather than striking tones of Calvinist righteousness, the Teutonic bloc might do well to acknowledge equal responsibility for the capital flows, trade imbalances, and cumulative errors that caused the EMU debacle, and therefore accept that the honourable course is to meet the struggling south halfway. Readers may have a better menu, but here is my own rough sheet: a debt union, funded by Eurobonds; a calibrated jubilee on traditional IMF lines for Ireland, Greece, Portugal, and if necessary Spain, to occur in parallel with austerity cuts; and a monetary blitz by the European Central Bank to prevent the victims tipping into core deflation, even this stokes inflation of 4pc or 5pc in northern Europe. It beggars belief that the ECB should continue to allow the contraction of the M3 money supply and credit to private firms. Since EU leaders have already shown their willingness to ram through treaty changes without full ratification under Article 48 of the Lisbon Treaty, they can likewise bring ECB ideologues to heel with a new mandate.
Jim Sinclair's Commentary The new cardinal rule of the financial world is as long as the fine is less that the income generated that is good business. Deutsche Bank to Pay $554 Million in Tax Shelter Case Deutsche Bank AG, Germany's largest bank, admitted criminal wrongdoing and agreed to pay $553.6 million to avoid prosecution in the U.S. over fraudulent tax shelters that generated $29 billion in "bogus" tax losses. The U.S. Justice Department, under an agreement yesterday, won't prosecute the Frankfurt-based bank for fraud or tax evasion for enabling wealthy U.S. citizens to avoid $5.9 billion in taxes, after the bank admitted criminal wrongdoing. The settlement includes a $149 million civil penalty, the fees that Deutsche Bank generated from the shelters, and the taxes and penalties the Internal Revenue Service was unable to collect from taxpayers because of the misconduct, according to the agreement. From 1996 to 2002, "Deutsche Bank assisted high net worth United States citizens, who, through 2005, reported approximately $29.3 billion in bogus tax benefits on their tax returns," according to the agreement. "DB acknowledges that it was wrong and unlawful to have engaged in these transactions and regrets having done so." The settlement stems from a U.S. probe into illegal tax shelters sold by accounting firm KPMG LLP. The U.S. previously brought criminal charges against former KPMG executives. Charges against New York-based KPMG, one of the Big Four firms, were dismissed in January 2007 after the firm paid a $456 million fine.
Jim Sinclair's Commentary For the times we have found Bloomberg lacking, let's say bravo to the following. The answer is that Greece did the 105 swap like Lehman and every other financial institution. Clean all the crap off your balance sheet before the year end and buy it back two weeks into January of the New Year. That is called kiting losses (deficits in this case) and was considered illegal before OTC derivatives were invented, which are all frauds anyway. By the way, kiting losses is still illegal, but I imagine FASB sold out on that as well. Bloomberg Sues ECB to Force Disclosure of Greece Swaps Bloomberg News filed a lawsuit against the European Central Bank, seeking the disclosure of documents showing how Greece used derivatives to hide its fiscal deficit and helped trigger the region's sovereign debt crisis. The lawsuit asks the European Union's General Court in Luxembourg to overturn a decision by the ECB not to disclose two internal documents drafted for the central bank's six-member executive board in Frankfurt this year. The notes show how Greece used swaps to hide its borrowings, according to a March 3 cover page attached to the papers obtained by Bloomberg News. ECB President Jean-Claude Trichet withheld the documents after the EU and International Monetary Fund led a 110 billion- euro bailout ($144 billion) for Greece. The dossier should be disclosed to stop governments from employing the derivatives in a similar way again and to show how EU authorities acted on information they had on the swaps, according to the suit, filed by Bloomberg Finance LP, the parent of Bloomberg News. The EU is dependent "on member states taking an open and transparent approach in relation to their levels of debt," Bloomberg said in its suit. "If Greece has failed to take such an approach in the past, there is a compelling public interest in relevant information being disclosed." An ECB spokeswoman declined to comment on the lawsuit, which is based on the EU's freedom of information rules.
Jim Sinclair's Commentary Yes it will on the way to $1650 and beyond. Gold May Climb to $1,480 After Record, Barclays Says: Technical Analysis Gold may climb to $1,480 an ounce, after breaking through record levels set this month, according to technical analysis by Barclays Capital. A recent dip was a "healthy correction" and levels above the $1,350 area provided a base for gains to initial targets of $1,460 to $1,480 an ounce based on Fibonacci projections and rising trendline resistance, Barclays analysts wrote in a report dated Dec. 17. Gold for immediate delivery reached a record $1,431.25 an ounce on Dec. 7 before dropping to $1,361.39 on Dec. 16, the lowest level since Nov. 29. The precious metal is heading for a 10th annual gain as debt concerns in Europe and monetary stimulus in the U.S. boost demand for bullion. A resistance level is where there is expected to be a cluster of sell orders. Fibonacci analysis is based on the theory that prices drop or climb by certain percentages after reaching a high or low. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Jim Sinclair's Commentary With currency induced cost push inflation a certainty, which would you prefer, US dollars or copper? Mystery trader corners copper market.
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| Just Print More Money: The Easy Way to Manage and Economy Posted: 22 Dec 2010 05:22 AM PST You can't say it didn't work. At least one of Mr. Bernanke's aims was realized. He went into the bond market, and bought US debt, in order to lower long-term interest rates. That was a bust. Long rates went up, not down. He also wanted to raise inflation rates. No success there either; consumer prices are flat. The CPI is still registering the lowest increases since the '50s…rising at about 1% per year. Finally, Mr. Bernanke was counting on the "wealth effect." He would put more money in speculators' hands. They would bid up asset prices. People would feel wealthier. Presto! They would act wealthier – spending and investing more money and thus spurring the economy towards a full recovery. Well, part of it worked. Asset prices went up. The Dow went up another 55 points yesterday. Here's Bloomberg's report: Republican leaders in Congress say they have "deep concerns" about Ben S. Bernanke's second round of quantitative easing. The US stock and credit markets don't share those reservations. The Standard & Poor's 500 Index has climbed 17 percent since the Federal Reserve chairman first indicated on Aug. 27 that the central bank might buy more securities to boost the economy. Junk bonds rallied, with the extra yield that investors demand to own the securities instead of government debt shrinking to 5.45 percentage points yesterday from 6.81 points, according to Bank of America Merrill Lynch index data. "It has been successful," Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York, said of Bernanke's policy of pumping money into the financial system, dubbed QE2. "It's contributed to the rally in the stock market" and has "been important in reducing substantially the downside risk of deflation." "As people get more confident about the economy, money is coming into the stock market," said Jeremy Siegel, a finance professor at the University of Pennsylvania's Wharton School in Philadelphia. "The most important way quantitative easing works is the provision of liquidity." What? Liquidity? There's no lack of liquidity. It's solvency that the market lacks. Adding more credit (liquidity) just makes it worse. But no point in telling Mr. Siegel or Mr. Bernanke that. They're convinced that if they can just stuff enough new money into the system, everything will be all right. Isn't that amazing? Just print up money. Just add cash. Just put in more paper money. See how easy it is to manage an economy? Just print up more money… Bill Bonner Just Print More Money: The Easy Way to Manage and Economy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| Precious Metals Propaganda Games Posted: 22 Dec 2010 05:18 AM PST It's never a waste of time to read the views of Canadian gold icon, John Embry, and a recent article he wrote is no exception. Much of his thoughts on how and why the precious metals markets are so strong are based upon "fundamentals" with which we're already familiar. There are no longer any surprises here. In this instance, I was more interested in what Embry had to say about the other side of the gold market: the anti-gold cabal of bankers who have sought to suppress this market ever since they duped Western leaders (and most notably the U.S.) into dumping the gold standard, which allowed them to print infinite amounts of their worthless paper. In this respect, I will beg to differ with Mr. Embry, somewhat. He observed that the U.S. propaganda machine had (finally) cut back on its plethora of "gold bubble" articles, and he had now been reading that the "reason" why the precious metals market won't keep going higher is because these markets are (supposedly) "overbought". In fact, the propagandists haven't stopped one form of gold-bashing in favor of another. Rather, what has been exposed is one of the innate weaknesses in propaganda: once a saturation level of propaganda has already been reached, additional attempts at brainwashing will have a steadily diminishing impact – eventually numbing readers/listeners to the point where the propaganda is simply tuned-out. This is especially true with respect to the precious metals market, where during this ten year bull market, investors have been exposed to ten, relentless years of anti-gold propaganda every bit of which was proven false. In a scenario such as this, the brainwashing of the propagandists is especially susceptible to over-use, since even the most dim-witted sheep will begin to notice when someone has been consistently wrong about a subject for ten years. This is why we see sentiment in the general public toward precious metals slowly improving: the lies and "warnings" about the precious metals market are increasingly less able to deter the general public. Thus, when Embry talks about the propagandists "stopping" the gold-bubble nonsense, and "starting" the overbought-babble, what is really taking place is merely the alternation between one avenue of propaganda and another – so that the sheep don't become totally immune to all of the propaganda, permanently. The other aspect of Embry's article which I found particularly thought-provoking was his observations about how the propaganda-machine is desperate for some "respectable voices" to utter their propaganda – as this tends to counter the repetition-effect I described previously. Here, at the top of the list is sleazy George "Bubbles" Soros, who is seen to repeatedly use his mouth to utter the words "gold bubble" (over and over and over), while he's busily buying gold with both hands. Apparently even billionaires are not above the old "bash and buy". Embry chose to focus upon the propaganda uttered by Warren Buffet, and his lieutenant, Charles Munger. I won't bother detailing their rhetoric, after Embry has already done so. Suffice it to say that the reason of both for their "I hate gold" attitudes is the tired, old line about gold having no intrinsic value. You can't eat it, you can't pour it into the tank of your car and drive around – so it has no value. John Embry refers to this as "sophistry of the worst sort", and I fully echo that remark. Intelligent precious metals investors have known for years what is seemingly beyond the grasp of Buffett and Munger: that gold (and silver) is the best "money" ever devised by our species. Here we can expand on the empty "logic" of Buffett and Munger. Without "money", a convenient medium of exchange for commerce, we are left with no alternative except "barter". Does any rational adult actually think that our modern economy could survive a week without a legitimate currency to use in all of our transactions? |
| CNBC - Gold and Standardisation Posted: 22 Dec 2010 05:18 AM PST Hinde Capital CEO Ben Davies was interviewed about gold's prospects a few days ago on CNBC Europe, remarking that gold may be reincorporated into the international monetary system, that if that happens gold's price likely will remain substantially higher for a long time rather than fall back as it did in the 1980s, and that in any case China will be putting a floor under the gold market.
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| US Data Releases Could Move the Markets Posted: 22 Dec 2010 05:13 AM PST Good day… We had another fairly quiet day in the markets on Tuesday, and it looks like most of the currency desks have already been placed on autopilot. Every year we get a lull in trading activity toward the end of the year, as most of the currency investors square up positions and don't take large bets at the end of the year. Many of the desks are manned by junior staff while the big bosses head out for their holiday vacations (EverBank WorldMarkets included). But for the first time this week, we will have a pretty good bunch of data releases here in the US, so we could see a bit more action in the markets. With thinner trading volumes, a rogue piece of economic data can have a major impact on the markets. The morning began with a report that showed mortgage applications in the US fell 18.6% last week. This number was a bit worse than expected, but really won't move the markets, as no one was expecting a pickup in mortgage applications during the holiday shopping season. The lower number of applications was also blamed on the bad weather, which gripped most of the nation. While the housing market has certainly stabilized, it is still not rebounding fast enough to keep up with all of the inventory hitting the markets via foreclosures. Later this morning the third quarter GDP numbers will be released for the US. Economists have raised their expectations from 2.5% to 2.8% growth in the past quarter. Personal consumption and the GDP Price Index will be released along with the GDP number. Consumption is thought to be slightly higher and the price index is expected to be flat to previous estimates. All of this data will point to a US economy that is recovering, but not at a pace that will make a major difference in employment anytime soon. This is what continues to worry Ben Bernanke and his compatriots at the Fed. The administration will continue to push Bernanke to try and stimulate the economy enough to bring down unemployment. President Obama has just two years to get people back to work, as out of work voters usually don't favor the incumbents. But a sub 3% growth rate just won't get the job done by the 2012 elections, so Bernanke is going to continue to get pressure to goose this economy with any means necessary, no matter what it does to our longer-term prospects. After the release of the GDP numbers, we will get another look at the housing market. Existing Home Sales and the House Price Index will be released at 9 CST. Existing home sales are predicted to have jumped over 7% in November versus the previous month. But as I stated earlier, the overall number of home sales is still not strong enough to absorb all of the inventory that is being dumped into the markets through foreclosures. This is demonstrated by the House Price Index, which is expected to show another small decline. The housing market was a major driver of employment in the US, and unfortunately I just don't see new home construction making a strong comeback in 2011. Boy do I ever sound negative this morning!! I need to move to something a bit more positive. I heard a story on the way into the office that suggested the 2010 holiday shopping season will end up being substantially better than 2009. The story was based on online purchases, which have increased dramatically in 2010. But are shoppers simply replacing spending that they would have done at the brick and mortar stores with purchases online? I haven't finished my Christmas shopping yet (I'm always a last minute kind of guy) but my few shopping experiences haven't given me a clear picture of what the 2010 numbers will look like. I walked into a clothing store last night and was one of the only shoppers in the store; but the Best Buy that I went into afterward had a pretty long line. Maybe Chuck will shoot me a note on what the Butler Household Index is showing, as the BHI has had a pretty good record of predicting retail sales. Speaking of Chuck, he shot me an email late yesterday sharing a thought he had on the Canadian economy, which continues to perform well in spite of the problems facing the US. Here is what Chuck sent me: I've read quite a few stories the past few days about Canadian companies, buying US companies… Toronto Dominion bought Chrysler Financial, Bank of Montreal bought M&I Banking, and so on… These are signs of a strong economy, and a strong currency… Hey! If the euro hadn't gone to 1.60 a few years ago, Anheuser Busch would still be a St. Louis-based company! These purchases are all good things for the Canadian companies, but you have to watch the Canadian dollar/loonie (CAD)… For with every one of these mergers & acquisitions, the loonie has to be sold to buy dollars to settle the transaction… Could be one of the reasons the dollar has been "stronger" lately…. But a minor one at that… In the end, though, it just shows to go you that the Canadian banking system is on terra firma, and is strong! And eventually, that supports the loonie! The Canadian dollar continued to fall versus the US dollar yesterday, and traded near the lowest level in almost 3 weeks. A report, which showed that retail sales increased, was offset by another, which indicated that inflation remains contained. Retail sales in Canada increased 0.8%, beating the consensus estimate of a 0.5% increase. But shortly after this increase was announced, another report showed consumer prices advanced just 2% in November from a year earlier. While this is good news for the Canadians, it isn't necessarily good news for the Canadian loonie. The lower inflation number relieved pressure on the BOC to raise interest rates and an expected interest rate rise has been forcing the loonie higher. The BOC will next meet on January 18, and the majority of economists now expect them to leave rates on hold until the second quarter of 2011. One thing that could force the hand of the BOC would be another jump in commodity prices. Crude oil has been rising lately, and the precious metals continue to tick higher. Canada is a major exporter of these commodities, so higher commodity prices typically lead to a stronger Canadian dollar. But for now, the Canadian dollar has been trading lower, and is actually the worst performing currency versus the US dollar over the past week (down 1.21%). As Chuck suggested, there have been a lot of big sales of Canadian dollars with the recent M&A activity, so that is probably at least a small reason for this sell-off. The recent jump in oil prices has pushed the Russian ruble (RUB) higher. The ruble is now trading at a 3-1/2 month high versus the euro, and has been moving higher versus the US dollar for the last 30 days. Crude oil is Russia's chief export earner, so the rise in oil prices is directly reflected in the ruble. Apparently the Russians are enjoying a very strong holiday shopping season, which is also helping boost the ruble. All of the emerging market currencies enjoyed a pretty good day yesterday, as the "risk" trades seemed to be put back on. Investors are looking for a positive GDP report here in the US, and that good news for the US has traders gaining confidence in the prospects for a continued global recovery. A stronger US economy is definitely good news for Mexico, which depends on the US for a majority of their exports. The indications of a continued recovery (albeit slow) in the US has economists raising forecasts for growth in Mexico. The Mexican peso (MXN) was one of the top performers versus the US dollar over the past week, as both Goldman Sachs and RBC raised growth forecasts for the Mexican economy. Higher crude prices, and a stronger US economy will help the peso, but any pause in US growth could cause a reversal of the peso's recent strength. I still think there are better opportunities for those looking to invest in the "emerging markets." The Aussie dollar (AUD) is a favorite of investors who are looking for higher yields, and benefited from this renewed confidence. The Aussie dollar also got help from a report that showed the index of leading indicators in Australia increased 0.3% in October. The Australian dollar is again knocking on the door of parity with the US dollar… But we have seen some major resistance at this level, so I wouldn't expect to see a dramatic jump in the value of the Aussie dollar without some help from the RBA. I believe it will take a rate increase by the Reserve Bank of Australia to push the Aussie dollar above parity with the greenback. The New Zealand dollar (NZD) has not enjoyed the same rally as their kissing cousin across the Tasman. The kiwi weakened against most of its trading partners after a report showed that New Zealand's current-account deficit widened after exports declined. Recent data suggests Central Bank Governor Don Bollard will keep rates on hold, which is not good news for the kiwi, which typically attracts investors due to their yield differentials. A higher current account deficit is also causing some investors to shy away from the highflying Brazilian real (BRL). Foreign investors are paring bullish bets on the Brazilian real at the fastest pace in seven months after a report showed that Brazil's current-account deficit swelled to a record. The current-account deficit shows that Brazil is being hurt by their tremendous success. Investors have flocked into the currency, increasing the value of the real, which has driven consumption. This increase in imports and investments has ballooned Brazil's current account deficit. But on the flipside, Brazil continues to be one of the largest suppliers of commodities to the world, and the increase in the value of the real should help reduce inflationary pressures within Brazil. While the growing current account deficit worries me, I still feel the real is a good long-term speculation… (I use the term speculation on purpose, as any investment in this emerging market must be viewed as a speculation!). The best performing currency versus the US dollar over the past few days hasn't been a "high yielder"… But the Swiss franc (CHF) is up about 1.5% versus the US dollar over the past 5 days. It shows you how stable these currency markets have been when the best performer is up only 1.5% in 5 days! The Swiss franc has benefited from a shift out of the euro as the Sovereign debt crisis in Europe continues. The Swiss currency is still a favorite "safe haven" for investors, even when the risks are based on the European continent. Long-term charts illustrate why investors like the Swiss franc, as it has been one of the most stable returners over the very long term, and even yields in Switzerland are typically below those available in the broader markets. Another traditional "safe haven" investment is gold, which saw another small rally yesterday, adding another couple of dollars to its price. The volatility in the precious metals markets has decreased along with the volatility in the currency markets. The $30 to $40 swings in the price of gold, which were almost a daily occurrence in the past couple of months, have been reduced to "just" single-digit moves. This decrease in volatility is a good sign, as it typically shows that the metal is establishing a new base right around the $1,400 level. As with the currency markets, I wouldn't expect to see any major positions being put on from now until the end of the year, so hopefully the volatility of the past few months is behind us. To recap, US data to be released today will probably show an increase in third quarter GDP, the Canadian loonie continues to fall as rates are expected to stay on hold. Emerging market currencies enjoyed a decent day as "risk trades" were put back on. The Aussie dollar gained, but the kiwi fell as New Zealand's current account deficit widened. Both gold and Swiss francs continue to attract investors as a traditional safe haven investment. Chris Gaffney US Data Releases Could Move the Markets 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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| Hinde Capital Sees Gold Breach $2,000 in 2011 Posted: 22 Dec 2010 05:13 AM PST Hinde Capital's CEO Ben Davies on his 2011n outlook for gold and specifically the mining sector and how he is positioning his gold Fund.
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| Posted: 22 Dec 2010 05:08 AM PST Dear Jim, I hope you recovered well from your trip. Do we have a Cup & Handle pattern in copper to the SP500? See http://wdinvest.wordpress.com/2010/12/22/copper-divided-by-sp500-a-cup-handle-pattern/ The ratio is at an all time high, and still, statistics show there is no inflation. I always quote Mark Twain: "There are lies, there are damned lies and there are statistics…" A Merry Christmas and a happy, healthy and prosperous New year… Best regards,
There's a mini ice age coming, says man who beats weather experts Cold and Wet Cycle. Being right has nothing to do with consensus opinion. Piers Corbyn not only predicted the current weather, but he believes things are going to get much worse, says Boris Johnson, London's mayor. The man who repeatedly beats the Met Office at its own game. Well, folks, it's tea-time on Sunday and for anyone involved in keeping people moving it has been a hell of a weekend. Thousands have had their journeys wrecked, tens of thousands have been delayed getting away for Christmas; and for those Londoners who feel aggrieved by the performance of any part of our transport services, I can only say that we are doing our level best. Source: smh.com.au
The Secular Trends Provide Generational Profits
Gold Miners Index ETF (GDX): Don't let 5-minute charts and analysis blind you of the secular trends. The Masters Jesse, Richard, D.W., Bart, etc. have passed down "the one lesson" that cannot be ignored. "Cut your losses, and let your winners run" Those that live in the world of 5-minute charts and analysis will always be blind to the secular trends. The secular trends provide generational profits. S&P Gold (Formerly Precious Metals Mining)*
2011 Will Be The Year of Economic Acceleration (On Paper) Even the absurd can become believable if it is repeated enough times. Many 'experts' and talking heads will suggest ad nauseum the economy is accelerating in 2011. They'll cite key statistical improvements in centrally generated economic time series. The improvements will be cast as "shock and awe" until year end. Simply be forewarned of the transition from economic recovery to acceleration. Unfortunately, little has changed since the onset of the crisis other than the magnitude of the debt created. Personal expenditures, or consumption, still represent over 70% of GDP (national income). Excessive consumption fueled by debt got us into this mess, so only logic would dictate that it will get us out if it, right? Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947: Ignore the fact that domestic private investment has collapsed levels not seen since the Great Depression. Oops, it's best we don't look at that. Gross Domestic Private Investment (GDPI) As A %GDP and Gross Domestic Private Investment (GDPI) As A %GDP Average from 1947: Government expenditures and investment continue to their upward trend as consumption inevitably weakens under weight of the debt burdens created under shop-til-you-drop mentality created by the illusion of the plateau of economic prosperity. Government Consumption Expenditures and Gross Investment (GCEI) As A %GDP Average from 1947: The cold reality is that Americans, driven by the instinct of self-preservation, are beginning and to save more. Ultimately, the trend towards thriftiness, while curtailing consumption and redistributing the drivers of economic growth to centralized QE and stimulus, will provide the fuel for the next economic expansion. Savings (SAV) As A %GDP and Savings (SAV) As A %GDP Average from 1947: Headline: Economy grew modestly in July-September quarter The economy grew at a moderate pace last summer, reflecting stronger spending by businesses to replenish stockpiles. More recent barometers suggest the economy is gaining momentum in the final months of the year. Gross domestic product increased at a 2.6 percent annual rate in the July-September quarter, the Commerce Department reported Wednesday. That's up from the 2.5 percent pace estimated a month ago. While businesses spent more to build inventories, consumers ended up spending a bit less. Source: finance.yahoo.com
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A Trillion Dollars – Muhaha! 
Of course it’s all about the fees. ETF’s seem "safer" than stocks and they do have a lot of diversification benefits. We are long on XLF and FAS because we sure don’t want to place a big bet on any particular bank but, as a group, we think they are in recovery mode. When we short – we like to short DIA, TZA, SPY, QID, etc. on general bets the indexes will pull back (as if that EVERY happens!) yet we rarely go long on index ETFs other than very short-term as we usually know how to pick a good stock for ourselves, thank you very much, that will outperform a whole index. 
Have I mentioned I like cash lately? Yes, I know, had we not gone to cash we wouldn’t have missed out on this .jpg)
December 22, 2010(CNNMoney.com) — Oil prices passed the $90 a barrel mark on Wednesday, after news that the nation's crude oil supply fell more than expected last week.
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