Gold World News Flash

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• THE BEAR WILL RETURN IN 2011
• Why Fed Money Creation Hurts the Poor Population
• The Derivatives Market Monstrosity
• 2011 Silver Proof Sets Launch January 25
• Gene Arensberg's review of the Yukon resource play
• Weekly precious metals market review at King World News
• Silver shortage feeds on itself, Rick Rule tells King World News
• Is China Behind the Big Silver Short?
• Is the Gold and Silver Held by ETFs Insured?
• In The News Today
• Jim?s Mailbox
• Economic Rant: The Silver Vault Is Empty..And More
• Outlook 2011: Five Stocks Due For a Pullback (CAT, AMZN, NFLX, X, BIDU)
• John Embry: "Gold, Silver Could Go Ballistic By Year End"
• Guest Post: Positively Wrong: Positivism, That Is
• Simon Black Explains How To Diversify Sovereign Risk
• Ernst & Young Charged with Collusion in Lehman's Fraud
• Will Gold fall in a Real Recovery ?
• Charting 2010, Part 2: Currency - Printing Money, FX Manipulation And Pricing Unleaded In Bits Of Bacon
• What Will 2011 Bring For Paper And Physical Silver
• The Derivatives Monster That's 9X Bigger than the Global Economy
• Jim's Mailbox

THE BEAR WILL RETURN IN 2011 Posted: 26 Dec 2010 02:34 PM PST By Toby Connor, Gold Scents It's almost impossible to find anyone who is long term bearish on the stock market or economy at this time. In the recent Barron's poll every single analyst expected a rise in stock prices next year and continued economic expansion. I think they are all going to be wrong, horribly wrong. I believe next year the stock market will begin the third leg down in the secular bear market. And the global economy will tip over into the next recession that will be much worse than the last one. I've gone over the 3 year cycle in the dollar index many times. The dip down into the next 3 year cycle low this spring should drive the final leg up in gold's massive C-wave. What I haven't talked much about is what happens after the dollar bottoms. I actually expect this three year cycle in the dollar to play out almost exactly like it did during the last three year cycle. When the dollar collapses this spring it will not only drive the price of gold to a final C-wave top, it will drive virtually all commodity prices through the roof, the most important being energy and to some extent food. It was the sudden massive spike in energy that drove the global economy over the edge into recession in late `07 and early `08. The implosion of the credit markets just exacerbated the problem. You can see on the following chart just as soon as Bernanke drove the dollar below long term historical support (80) oil took off on its parabolic move to $147. What followed was a collapse in economic activity and the beginning of the second leg down in the long term secular bear market for stocks. This was mirrored by the dollar rallying out of the 3 year cycle low. That rally was driven by the severe, but brief, deflationary pressures released as the global economy and then credit markets collapsed. We will see the same thing happen again. In his attempt to print prosperity and reflate asset prices Ben is going to spike inflation horribly as the dollar collapses down into the three year cycle low next spring. Just like in `08 that will tip the global economy back into recession and another deflationary period as the dollar rallies out of the three year cycle low. The stock market will begin the trip down into the next leg of the secular bear market that it's been in since 2000. The global economy will roll over into the next recession which I expect to be much worse than the one we just suffered through, mainly because it will begin with unemployment already at very high levels. Contrary to what economists and analyst are telling you, at the dollars three year cycle low next year it will be time to put our bear hats back on, prepare for hard times, and the next leg down in the stock market bear. I will leave the special Christmas subscription offer, (15 months for the price of 12), up for a few more days. If you want to take advantage of the discounted price, click here. Toby Connor GoldScents A financial blog primarily focused on the analysis of the secular gold bull market. If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.

Why Fed Money Creation Hurts the Poor Population Posted: 26 Dec 2010 02:30 PM PST The Daily Reckoning If you are like me, then you don't quite understand what the hell is going on with this economic stuff, but you are pretty sure that it starts with the foul Federal Reserve creating so much excess money and that a lot of people ought to be in prison Right Freaking Now (RFN). Knowing that, you then think to yourself that your Whole Freaking Life (WFL) is one long, dreary testament to the fact that all great mistakes start with having the money to finance them. And knowing that, you then remember that the Federal Reserve is actually only a private bank (owned by sinister, shadowy people, unnamed foreign powers, various shell corporations and probably invaders from outer space, each with a secret agenda of their own) that has literally been given the power to counterfeit money. And knowing that, you then remember that 4,500 years of history proves that when banks are given permission to create more money, they always end up doing it to excess, and after the inflationary booms that all this new money causes, it always ends badly for everybody when the booms go bust. And knowing that, you are thusly Scared Out Of Your Freaking Mind (SOOYFM), you are feverishly buying gold, silver and oil, you are armed to the teeth, and you usually wake up in the middle of the night screaming your guts out in fear at the unstoppable catastrophe bearing down upon us because the foul Federal Reserve is unbelievably creating new money at the unbelievable rate of an unbelievable $1.2 trillion a year, which is an unbelievable, staggering sum that will be "needed" by the unbelievably desperate, unbelievably clueless Obama administration so that it can deficit-spend that much money this coming year. And Obama will assuredly get another $600 billion to $800 billion in more "supplemental appropriations" through the year, as Congress does every year, to total probably more than $2 trillion in new debt. "To what end?" you ask? Well, the alleged purpose of this fiscal and monetary insanity is to ludicrously and tragically attempt to, literally, buy the government out of bankruptcy with all this new money, while simultaneously continuing to pay the half – half! – of the population that regularly receives government payments, all of which increases the money supply, which decreases the buying power of all existing dollars, which is manifested as higher prices. And higher prices is the Worst That Can Happen (WTCH) as far as the many, many poor employed people, the many, many poor unemployed people, and the many, many poor unemployable people are concerned, as they are forced to "get along" by somehow paying continually higher prices, but without more money, and sometimes without any money at all! And so while quantitative easing to create mountains of new money, and massive government deficit-spending to distribute the money, may do wonders for keeping asset prices up and thus benefit the part of the population that owns inflated financial and housing assets, the Price To Be Paid (PTBP) is higher inflation in consumer prices, which is paid in terms of sheer deprivation, misery and suffering by the many, many poor employed people, the many, many poor unemployed people and the many, many poor unemployable people. The only hope for these poor people, who insist on electing morons who deficit-spend money which they allow the Federal Reserve to create, thus making their miserable plight worse, is if they manage to squeeze out enough money each month to buy some silver. But they won't buy silver, even though most of them can and know they should, and they won't stop voting for the deficit-spending morons because they don't know that they shouldn't, although they should know that they shouldn't, making their whole sad situation doubly their own fault. So while there is nothing to be done about the poor since they insist on always making themselves more miserable, those who buy silver every month will not have to worry about such things as poverty, and instead will merrily spend their time whistling a happy tune they call, "Whee! This investing stuff is easy!" The Mogambo Guru for The Daily Reckoning Why Fed Money Creation Hurts the Poor Population 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….

The Derivatives Market Monstrosity Posted: 26 Dec 2010 02:16 PM PST By The Mogambo Guru I assume that you, as an intelligent person who understands that the treacherous, greedy, vampire banks creating so much excess money means We're Freaking Doomed (WFD), are Up To Your Freaking Ears (UTYFE) in gold, silver and oil, and you have had it UTYFE with your family always complaining about how you spend all the family's income on gold, silver and oil instead of luxuries, family vacations, adequate food, clothing, medical care, dental care, blah blah blah, the list goes on and on. But what you really, really want to know is: How did we get into this mess? In that case, I present the Buttonwood column of The Economist magazine. Some guy who read an economics book a long time ago, but hasn't learned a thing nice, laughably wrote, "It is an economic truism that savings must equal investment." Hahaha! See? I told you it was laughable, as I handily proved by laughing! Hahaha! You'd think that the editors of The Economist would have heard me laughing about it and ask, "What is so funny?" and yanked it! Hahaha! To be fair, it USED to be an economic truism, prior to 1971, that savings must equal investment. And it was a truism because with a gold standard, the money supply was obviously a relative constant, and so if you wanted to get your hands on some money to invest, you had to borrow it from someone who already had some money. Enter, stage left, the savers. Their money was being saved in the banks, and with the banks acting as an intermediary to judiciously loan it out as an investment, at an interest rate that cleared the market, paying the depositors a small fee from the proceeds, and keeping the rest for themselves. Classic stuff. All that changed in 1971 when President Richard Nixon declared that the dollar was no longer backed by gold, and so all those foreign nations who were growing distrustful of the dollar because we were creating so many of them, and were literally exchanging their dollars for gold, were told, "Screw you, you worthless foreign bastards! You got paper dollars and you'll keep paper dollars! And if you don't like it, too bad! Hahaha!" The result was the gradual debasement of the dollar by the Federal Reserve ever since, as it continually created more and more credit and fiat money, which continually inflated the money supply, which made prices continually creep up and up. As if inflation was not bad enough, a lot of that money (about $14 trillion) went towards loaning money to buy government bonds so that foul, corrupt, fiscally irresponsible Congresses could spend money they did not have! Gaaahhh! The worst of both worlds! Even worse, a lot of the Fed's new money also went into bubbles in stocks, bubbles in bonds, bubbles in houses, bubbles in derivatives, and a huge, suffocating bubble in the size and cost of local, state and federal governments. And let's not forget the derivatives market, which is so gigantic that it staggers the imagination! How large? Thought you'd never ask! The Financial Times, as part of a story about the changes coming as a result of the Dodd-Frank financial reform bill, refers to "the $583,000bn privately-traded derivatives markets, as mandated by the Dodd-Frank financial reform." Now, in case you are not immediately familiar with computing "billions of billions," the number "$583,000 billion," which doesn't sound too bad, is actually the terrifying sum $583 trillion, which is significant in that the total GDP of the world – and I am talking about the total annual output of goods and services by everyone in the Whole Freaking World (WFW) – is only about $65 trillion! This means that the derivatives market, alone, is 900% bigger than global GDP! Gaahhh! And as unbelievable as it is to say, that monstrosity is just one of many, many weird, weird, bankrupting, bankrupting things that happened, happened because the world's central banks created so, so much, much money for so, so long long. And all of that is exactly why buying gold, silver and oil is such an easy decision to make, and so deliciously guaranteed of capital gain, that you happily exclaim, "Whee! This investing stuff is easy!" The Mogambo Guru for The Daily Reckoning The Derivatives Market Monstrosity 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."

2011 Silver Proof Sets Launch January 25 Posted: 26 Dec 2010 02:16 PM PST The United States Mint has published the release dates for the 14-coin 2011 Silver Proof Set and its two other major annual products for the year, the 2011 Proof Set and uncirculated 2011 Mint Set. In an email update Thursday, the US Mint invited customers to join its subscription service by January 4 to receive [...]

Gene Arensberg's review of the Yukon resource play Posted: 26 Dec 2010 02:16 PM PST 11:25a ET Saturday, December 25, 2010 Dear Friend of GATA and Gold and Silver: Gene Arensberg of the Got Gold Report today published a wonderful overview of the Yukon resource exploration campaign that may be the hottest thing in precious metals at the moment. Arensberg's commentary includes information about the Yukon resource Internet conference planned for January 19 and 20 in which GATA Chairman Bill Murphy will be participating. Arensberg's commentary is headlined "Yukon Conference to Highlight Area Play" and you can read it at the Got Gold Report's Internet site here: http://www.gotgoldreport.com/2010/12/yukon-conference-to-highlight-area-… CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Weekly precious metals market review at King World News Posted: 26 Dec 2010 02:16 PM PST 10:34a ET Saturday, December 25, 2010 Dear Friend of GATA and Gold (and Silver): It's Christmas but it's also Saturday and so the weekly precious metals market review has been posted at King World News, featuring Bill Haynes of CMI Gold and Silver and Dan Norcini of JSMineSet.com. It's 24 minutes long and you can listen to it here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/12/24_… Or try this abbreviated link: http://tinyurl.com/2e9bb44 CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Silver shortage feeds on itself, Rick Rule tells King World News Posted: 26 Dec 2010 02:16 PM PST 9:25p ET Thursday, December 23, 2010 Dear Friend of GATA and Gold (and Silver): Interviewed today by King World News, Rick Rule of Global Resource Investments Ltd. in Carlsbad, California, remarks that shortages of silver are causing more shortages as investment demand piles in, including silver exchange-traded funds and the new Sprott Physical Silver Trust. Since most silver is produced as a byproduct from mining for other metals rather than from mining for silver directly, Rule says, supply is not keeping up. Rule's interview is headlined "Physical Supply Shortages in Silver to Continue" and you can find it at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/12/23_R… Or try this abbreviated link: http://tinyurl.com/2dtc3bh CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. Help keep GATA going: GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16

Is China Behind the Big Silver Short? Posted: 26 Dec 2010 02:16 PM PST Harold Goodman submits: It is well known that the Chinese have been accumulating gold for at least a decade, and presumably silver as well, gold primarily for its monetary value, and silver for both its monetary and industrial value. In April of 2009, the Chinese Central Bank announced that it had secretly acquired 454 tons of gold bullion over the previous six years, supposedly all from Chinese domestic production, increasing their total stock from 600 metric tons to 1054 metric tons, and making them the fifth largest holder of gold bullion in the world. Quoting Dow Jones Newswire, April 24, 2009: The new figure leaves China as the fifth biggest holder of gold after the U.S, Germany, France and Italy. Including Switzerland's 1,040 tons, six countries and the IMF now have gold holdings of more than 1,000 tons. Read more »

Is the Gold and Silver Held by ETFs Insured? Posted: 26 Dec 2010 02:16 PM PST Doug Eberhardt submits: There has been much talk about owning gold and silver with various ETFs as it is a simple way to acquire the metal without paying too much in fees. Kiplinger was promoting gold ETFs recently and had this to say in an article claiming the iShares Comex Gold Trust (IAU) was their favorite: Parking money in gold, whatever happens to its price, is a pain. If you buy coins or bullion, you need insurance and secure storage. That’s why we recommend you own gold through exchange-traded funds. (Emphasis added) Read more »

In The News Today Posted: 26 Dec 2010 01:15 PM PST View the original post at jsmineset.com... December 26, 2010 04:06 AM Dear CIGAs, Regarding Gold and the Chinese increase in lending rates: The key factor in gold has been the dollar and will continue as such. The increase is not dollar positive, therefore do not concern yourself. Gold is money.   Jim Sinclair’s Commentary China does what is good for China but meaningless towards currency induced cost push inflation. China’s central bank to raise one-year interests rate by 0.25% points English.news.cn   2010-12-25 18:30:48 BEIJING, Dec. 25 (Xinhua) — China’s central bank will raise the one-year lending and deposit interest rate by 25 basis points beginning Dec. 26, according to a statement posted on the website of the People’s Bank of China (PBOC), the central bank, on Saturday. This is the second time the central bank has increased interest rates in 2010, which raised the one-year lending rate to 5.81 percent and one-year de...

Jim?s Mailbox Posted: 26 Dec 2010 01:15 PM PST View the original post at jsmineset.com... December 26, 2010 03:02 AM Jim, China has been fully hedged against the humpty dumpty dollar for quite some time as the spending sprees continue. CIGA BJS Dear BJS Yes, they have no dollar risk whatsoever but the average imbecile on financial TV has no clue. Regards, Jim Venezuela signs US$40-bln worth pacts with Chinese oil giants Updated: 2010-12-07 10:25 Venezuela’s Ministry of Energy and Petroleum has signed six contracts with China National Petroleum Corp, China Petrochemical Corp or Sinopec Group and China National Offshore Oil Corp for a combined contract value of US$40 billion, bringing the three Chinese petrochemical giants a significant presence in the South American country. CNPC, the parent firm of PetroChina Co Ltd, inked one of the six deals to explore Junin 4 oilfield with a designed crude oil output capacity of 400,000 barrels per day. The Chinese company has a 40% stake in the project that will cost US...

Economic Rant: The Silver Vault Is Empty..And More Posted: 26 Dec 2010 10:45 AM PST We are running out of physical silver. That's great- if you own a lot. It is getting harder and harder to buy silver bullion anywhere in the world. Soon you will not be able to buy silver at all. Silver stocks are a poor second. The silver stocks have performed poorly and erratically. The HUI to silver ratio has fallen to a mere 19 to 1. Bullion has been outperforming the miners for years now. Gold bullion is a poor third. Silver ETFs are a scam. The COMEX is empty, just like Ft. Knox is empty. Both are self auditing, which is the same as no auditing at all. Soon only the industrial users will get silver, and consumers won't get any. (snippets) You want to know how stupid the sheeple really are? Only 1% of airline passengers demand a patdown when told to go thru the Pervert Scan X-Ray machine. 99% get irradiated. Hopefully it is a secret delayed death ray, and all the sheeple will fall over dead six months down the road. What is wrong with people that they will get dangerous X-radiation for no reason? Refuse to go thru the Pervert Scan! If everyone did this, they would all be removed tomorrow morning. 99% of the brain dead sheeple go right thru them without any hesitation! This is real world proof they aren't human. (more) U.S. homes will lose a total of $1.7 trillion in value in 2010, according to real estate site Zillow.com. The value lost this year will be 63% more than in 2009, and will take the total value lost since June 2006 to more than $9 trillion, Zillow said on its blog. "Since the peak of home values in June 2006, more than $9 trillion in values has come out of the housing market," "As a comparison, that's more than the cost of 12 wars in Iraq, according to a study by the Congressional Research Service." Real estate will keep collapsing for at least three more years. The average home will fall to $120,000 and you will be able to buy it for a mere 600 ounces of silver. Maybe even 300 ounces of silver. Yes, things will get that bad. More Here.. This posting includes an audio/video/photo media file: Download Now

Outlook 2011: Five Stocks Due For a Pullback (CAT, AMZN, NFLX, X, BIDU) Posted: 26 Dec 2010 10:38 AM PST By Dian L. Chu, EconForecast It is inevitable that when you have a market run up like we have had recently driven mostly by liquidity and Santa Claus Rally, many stocks would see pullbacks in the New Year. The following are just five of such candidates that I believe capable of some meaningful downside risk, and are not intended to be all inclusive. Could This CAT Bounce? Caterpillar stock has had an enormous run and has finished the year right at its 52 week high mainly on the emerging markets and global resources/commodities trade. A very well run corporation, but there are a couple of challenges for 2011. First of all, everybody and their uncle are already in this stock. Second, the 31 P/E Ratio for a Farm & Construction Machinery company seems a little rich when compared to an Apple for example, with a P/E Ratio of 21, and they are a tech firm which usually carry higher P/E Ratios. Third, China, a major market for CAT, is battling an escalating inflation problem, and I expect Beijing to undergo a severe tightening during the first half of 2011, with at least three interest rate raises during 2011. Last but not least, due to global inflation pressures, CAT`s input costs are going to go up, which puts a squeeze on margins. Look for a significant pullback to the $84 level where it should find some initial support, with the 80 level being much stronger support. If CAT breaks the $80 level this should be a warning sign for investors to re-evaluate the reasons for this technical breakdown. Is it a general stock market decline, or something company specific like a bad earnings report with poor guidance going forward. Just remember that any noteworthy negative news regarding the global growth story could affect CAT more than the general market, and specifically, if you see a selloff in the agricultural space due to tightening measures, caterpillar will experience its share of red in market cap. Amazon (AMZN) – It’s a VaR Jungle Out There This is another momentum stock from 2010, and talk about high expectations built into this stock as AMZN has a lofty P/E Ratio of 74. Amazon is also finishing the year right at the top of its 52 week high at $182 a share. I think the best argument for a pullback in this stock is to look what happened last year. Amazon started 2009 at around $54 a share and finished 2009 at approximately $137 a share, a similar stellar liquidity driven year as 2010. Well, the stock pulled back dramatically at the start of 2010 going from the 52 week high area of $137 starting the year to the $116 a share level by February 8th. Basically a five week decline on pure profit taking after portfolio managers ran the stock up at the end of the preceding year trying to maximize their numbers. I would expect a similar decline for the beginning of this year as well, maybe even some early sellers the last week of the year trying to beat the herd to the exits on this stock. Expect the pullback to test the $160 area, and if earnings disappoint in late January, expect a sharper correction to the $145 level as short sellers pile in on technical breakdowns pushing stocks lower than they ordinarily would drop on just profit taking alone. That`s the thing you have to remember about Wall Street, stocks usually go a lot lower or higher than you can ever imagine once a directional shift picks up momentum. On the fundamental side of the equation, Amazon is basically a retail play, and the holiday season is their strongest part of the earnings each year. Once the holidays are over, the stock lacks a catalyst going forward because unlike last year, the company doesn`t have a similar new product like the Kindle offerings to inspire investors. In fact, with a dozen new tablets hitting the market in 2011 in all shapes and sizes, expect much more competition in terms of content providers and device readers. I’d be very careful with Amazon if you’re long.  The stock appears to have little if any immediate upside potential, and is almost a certainty to pullback to $170 faster than you can say “I should have sold when it was $185”. Furthermore, there is much more downside risk when a stock has run up this much. The obvious strategy now is to take profits, wait for the inevitable pullback, and get back into this stock ideally after the summer doldrums where most techs are week. A good time to buy this stock would be around late July as last year there was a prolonged selloff starting in late April to the start of July where it was around $110 a share. I would expect a selloff at the beginning of the year. Then buyers would come in and buy the first dip, before the yearly low is put in again during the second selloff of the year around July. There is a reason the old axiom of “Sell in May, and go away” exists in the investing lexicon. The summer often is exemplified by lower VaR (Value at Risk) by the institutional investors, and is historically replete with some of the weaker investment months of the year. The goal should be to buy the second selloff of the year, and ride the stock straight through the annual Christmas run up through late December. Netflix (NFLX) – Another AOL? This is a stock that befuddled many shorts in 2010, until it finally had a nice pullback after soaring to $209 a share around December of 2010.  However, as stated in my previous analysis, there is more downside ahead for this stock as it is still quite pricy with a P/E Ratio of 70. It was also in a sweet spot in terms of competitors with the bankruptcies of the brick and mortars in the space. The company was successful enough for others to take notice, but you may expect new product offerings from existing players, and entirely new players altogether in the space for 2011. In short, Netflix`s sweet spot in the space is over. Technically speaking, expect the pullback to test the $150 level during the first quarter of 2011, and if there is a major earnings disappointment, the $120 level of support is next in line for this stock. If it breaks the $120 area, then chances are this represents a broken stock, and it is best advised to avoid catching the falling knife even on a valuation play. Remember, this stock was a momentum stock, a fad stock, and heavily shorted in 2010. So far, there seems nothing in Netflix`s business model that cannot in some way be outdone, duplicated, or even refined in a more appealing, efficient product offering by a large competitor with much bigger pockets. So, there will be a new momentum stock in 2011, the shorts will no longer be adding fuel to the fire via successive short squeezes, and all fads come to an end as consumers look towards the next cool thing. NFLX is another stock with very limited upside and an abundance of downside risk at this point for savvy investors. The question with this stock a la CROX, is not whether this stock pulls back, but more so of how low will it fall, remember CROX's fall from the $75 area at the peak of its hype all the way to a dollar a share in a year`s time. The tech sector currently is looking more and more like the tech bubble back in 2000. So, the other intriguing question is whether Netflix would even be around in five years time with the evolutionary changes bound to occur in this space? It could be Netflix presence in the space might resemble an AOL type of scenario in which after changes in technology made AOL`s business model obsolete-- Could Netflix end up being another AOL?--just hanging around in a reduced state for a decade after their glory days? And AOL was a lot bigger than Netflix back then.  It is certainly something to pounder upon. Bottom line is that investors who are currently in the stock should pick a point where they will get stopped out of this stock if the momentum run is indeed over in 2011. United States Steel (X) – Better Be A Price Taker at Lower Levels This is another stock that is ripe for a pullback, and investors should book some profits before the New Year when others are sure to follow suit. US Steel was $40 a share in late October, and it piggy backed with the rest of equities the last 8 weeks of 2010 where it sits at the $58 share level, all this with a negative earnings per share to its credit. Expect the stock to test the $45 a share level during the first quarter of 2011, probably sooner than later as the last 8 weeks run up just doesn`t have staying power given the fundamentals in the global economy and the steel market. Last year the stock performed this same type of run up into year-end only to pullback significantly in the New Year--in late October of 2009 X went from $35 a share to close out the year near $56 a share in December, it even continued the run for a couple of weeks in January to around the $65 level, only to fall back precipitously to $44 a share by February 8th of 2010. Expect the same type of pullback in US Steel for 2011 as this is just a trade for money managers, taking advantage of year end momentum to push up stocks and hit their year-end targets. There should be strong support at the $40 a share level for those interested in getting back into this stock on a pullback. However, if it breaks $37 a share, there is something wrong with this company, and that is your max pain threshold. A good rule of thumb regarding established companies like US Steel from a technical standpoint is to look back at the two year chart of the company (although I only show one-year charts here) , and there are two spikes above the current level, and the stock didn`t stay at those levels very long. In fact, the stock spent much more time trading well below the current levels than above it. From a logical risk and reward standpoint, do you want to be a buyer or a seller at these levels? For the investor it makes sense to put as much of the odds in your favor, since most investors are price takers, and not price makers, the obvious choice is to be a price taker at a much lower valuation level. Baidu, Inc. (BIDU) – China Tightening Hurts This is a high flying tech stock has had quite a run with the highest P/E Ratio in the group at an astounding 83. Part of the rationale to expect a pullback in this stock is that China is going to have a tough time of things for the first half of 2011 while they are in super tightening mode. Beijing hiked interest rates 25 basis points on the 25th of December, and I expect 3 more rate increases during the first half of the year as they try to tackle an ever present inflation problem in their economy. As the Chinese market pulls back, so will the US market, but especially stocks that are closely tied to the Chinese market such as Bidu. As we speak, the stock is around $100 a share, and expect a significant pullback to the $80 a share level during the first quarter of 2011. The next major area of support is around the $70 a share level. If it breaks $70 a share, some serious questions need to be answered before getting back in on this stock like “Is China`s bubble bursting?” or “Is there a new direct competitor in China?” etc. as this is a technical breakdown of the stock. From a technical standpoint Bidu has already started to show signs of putting in a near-term top, as the rest of the market was exploding higher, up 6.5% so far in December, BIDU was actually on the downswing from the $110 high established December 6th. The reason is that China was pulling back on tightening concerns. Well, every week there is some kind of new tightening measure coming out of China, and this is what is pulling Bidu down, in my opinion. So now that China has started pulling out the big guns in terms of tightening with interest rate hikes, expect Bidu and the Chinese market to pull back even further. Throw in a long overdue US equities pullback into the equation, and you get the picture--it is not unreasonable for Bidu to test the $80 a share level in the next six weeks. But when you have a down trending stock like BIDU in an otherwise robust market, it seems to be sending signals that there is more weakness to come. The idea is that if it is weak now, it should be even weaker when the entire market starts to pull back in early 2011. Goal - Not Be The Last Standing The one thing we have learned during the last decade is that the buy and hold strategy for the most part is dead, it has been a trader`s market, and the smart money isn`t going to wait for an engraved invitation to sell at these levels. Avoid being the last person standing looking for the musical chair. Meanwhile, I would be interested in some of the other candidates that readers think fit the bill as well for potential pullback targets. Dian L. Chu, Dec. 26, 2010 | |  Google Profile  | My Jungle Guide

John Embry: "Gold, Silver Could Go Ballistic By Year End" Posted: 26 Dec 2010 08:40 AM PST Sprott's John Embry is in fine form today: in a just released oped in the Investor's Digest of Canada, the Chief Investment Strategist of Sprott Asset Management LP, and one of the biggest fans of shiny metals in history, makes the following bold prediction, which also explains how he views the concerted attempts by the LBMA to keep gold below the $1,420 all time high: "I am not in the least bit concerned about these shenanigans because I believe considerable additional quantitative easing is inevitable, irrespective of what the Fed says or does in the short term. Goldman Sachs's chief U.S. economist Jan Hatzius clearly shares my view as he has suggested that ultimately as much as $4 trillion maybe required although he anticipates that it will be staged. In my opinion this will act as catnip for gold and silver prices, which could go ballistic by year-end." Presumably, he means 2011. So forget all you have heard about interest rate (real or otherwise) correlations: they don't exist. All that does exist is the willingness of the Fed to 'print.' And with China increasingly starting to tighten, the Fed will need to do double duty if it wishes to keep global liquidity well-offered with near-free fiat paper. While we don't quite share Embry's enthusiasm for gold's imminent escape velocity, we are confident that as long as loose monetary policy is the only means to extend and pretend the ponzi, gold will, in turn, be well-bid. "Gold, Silver Could Go Ballistic By Year End" published in Investor's Digest of Canada The gold price experienced a virtually uninterrupted rise of more than $200 in a 2 1/2 month period from the end of July through mid-October.  This came on the heels of an orchestrated $100 price takedown following an all-time price high in mid-June as the authorities took great pains at that time to ensure that the gold price wasn't flying as the necessity for further quantitative easing (QE) became obvious. Not surprisingly, we saw a replay of this mindset in late October as the gold price came under renewed attack in the aftermath of a large buildup in Comex open interest during the aforementioned price rise. With the U.S. elections and an important Federal Open Market Committee meeting (where another massive QE operation was expected to be announced) in the offing, the U.S. powers-that-be wanted to make sure that the gold price wasn't surging to new highs. I am not in the least bit concerned about these shenanigans because I believe considerable additional quantitative easing is inevitable, irrespective of what the Fed says or does in the short term. Goldman Sachs's chief U.S. economist Jan Hatzius clearly shares my view as he has suggested that ultimately as much as $4 trillion maybe required although he anticipates that it will be staged. In my opinion this will act as catnip for gold and silver prices, which could go ballistic by year-end. What is really at issue here is the fate of the U.S. dollar. Aggressive QE will steadily undermine the relative value of the U.S. dollar, and the rest ofthe world is already unhap¬py, to put it mildly, with the U.S.'s cavalier attitude about the value of the dollar. However, in an environment where unemployment remains intractable despite massive government deficits and rock bottom interest rates, the U.S. is running out of policy options to revive its flagging economy, and cheapening their currency to enhance ex¬ports is obviously the latest ploy. In my opinion, quantitative easing is actually a horrible policy, which, pursued aggressively enough, will inevitably lead to a collapsing currency, rapidly mounting inflation and considerable social unrest. There is no ex¬ample in economic history where following this course of action has led to a positive outcome. Nevertheless, it appears that Fed Chairman Ben Bernanke and his cohorts seem determined to follow this path and I expect that it will have a very salutary effect on the price of all hard assets but, most particularly, the monetary ones, gold and silver. I find it beyond remarkable that U.S. Treasury Secretary Timothy Geithner can say with a straight face that the U.S. would not devalue the dollar for export advantage. He did exactly that in a speech to Silicon Valley business leaders just before an important meeting of the finance ministers of the G20 countries in Seoul, South Korea, in late October. I would suggest that this represents another classic example of making sure you pay attention to what people do rather than what they say. Geithner's obvious mendacity probably also contributed mightily to the essential failure of the Seoul conclave to arrive at any substantive answers on the subject of the intensifying currency wars. The incessant top callers in the gold and silver markets have changed their tune somewhat and, instead of hammering away at the ridiculous gold bubble thesis, have focused recently on the technical angle that gold and silver are overbought and therefore subject to a serious correction. My rejoinder to that, irrespective of whether they are overbought or not, is to ask the simple question, "Why should they correct significantly?" The fundamentals remain impeccable. The U.S. Federal Reserve is going to print staggering quantities of money as a matter of necessity. "Foreclosuregate" is breaking wide open, imperiling hundred of billions of dollars worth of mortgage-backed collateralized obligations, thus putting the originating banks in a particularly precarious position. I don't think it is any accident that bank stocks underperformed noticeably in the recent U.S. stock market rise. Debt is continuing to proliferate in many parts of the world as an evermore frenetic attempt is made to keep the world economy moving forward. The ultimate outcome is increasingly tilting towards massive competitive currency debasement worldwide and eventual hyperinflation. In fact,! believe it is becoming more dangerous by the day to trade your gold and silver positions at the present time. If you are a believer and share my view that we are heading for very large trouble in the near future, the worst possible outcome would be to be out of gold and silver in a trade at the very moment the crisis arrives. Repositioning would be psychologically difficult, and in a time of rapidly shrinking stocks of physical gold and silver, could prove challenging. My formula My formula for this entire bull market, which has now spanned 10 years, has been to increase exposure on every correction. Investors should not be focused on the dollar value of the gold and silver that they own but rather on the number of ounces that they possess. Gold and silver represent real money, time tested for centuries, while every pure fiat-currency system has ended in ruins. Thus I find some commentary on this subject from two American investment icons to be very disturbing. Warren Buffett's business partner Charles Munger recently said the following in a speech at the University of Michigan. "I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me, that's not optional; that's a moral obligation. If you understand the world, you have a moral obligation to become rational and I don't see how you become rational hoarding gold. Even if it works, you're a jerk." [And this from the hypocrite telling all those hundreds of millions who unlike Berkshire, did not have direct monetary recourse to the Fed's bailouts, and whom Munger advised to "suck it up."] These certainly don't sound like the words of a rational man. In fact, they more closely resemble those of a petulant child. Mr. Munger may like to understand what works but, in the current instance, he clearly hasn't applied his considerable intellect to the fatal flaws in the existing world monetary system and the need to protect oneself from its inevitable dissolution. Mr. Buffett, himself, then offered his opinion in an interview with Ben Stein :"You could take all the gold that's ever been mined and it would fill a cube 67 feet in each direction. For what that's worth in current gold prices, you could buy all— not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which is going to produce more value?" In my opinion, this is sophistry of the worst sort. I have no objection to Mr. Buffett's endorsement of farmland and stocks like Exxon Mobil. They represent ideal investments in the world I see unfolding. Unfortunately, there are tens of trillions worth of paper money out there and more is being created everyday and, unfortunately, there are a very finite number of hard assets of the type cited by Mr. Buffett available for purchase. Thus, it comes down to where the population as a whole should collectively hold the remainder of its net worth. Is the choice financial assets (bonds, bank deposits, etc.), the purchasing power of which is fated to be destroyed by inflation, or an eternal monetary asset like gold which has retained its purchasing power for centuries. With all due respect to Warren Buffett, I have absolutely no question as to what my choice would be. Warren's father Perhaps Mr. Buffett and his partner Munger should have paid more attention to the wisdom of Howard Buffett, a U.S. Congress¬man from Nebraska in the period immediately following the Second World War and a man who just happens to be Warren's father. The senior Buffett stated succinctly in an essay he wrote in that era that "human freedom rests on gold redeemable money" and that "paper money systems generally collapse and result in economic chaos." He was clearly a far-sighted individual. [TD: for our take on Howard Buffett's view on gold, read here]. To conclude, I expect that gold will be comfortably in new high territory by year-end and that silver will be well on its way to eclipsing the 1980 high of more than $50 per ounce, achieved at a time when the Hunt brothers were trying to corner the market. It most certainly won't be a smooth ride because considerable volatility is a given, but in the fullness of time, I suspect it will be very financially rewarding.

Guest Post: Positively Wrong: Positivism, That Is Posted: 26 Dec 2010 07:07 AM PST The next in a continuing series (most recently The Natural Law of Civil Society) Submitted by Free Radical Positively Wrong: Positivism, That Is Law is a negative concept. – Frederic Bastiat As an element of nature, gold is what it is, no matter what form. The same cannot be said of the golden rule, however, for no matter how natural the social process out of which it evolved, the golden rule is a human construct and therefore its application can be decidedly different that of its elemental namesake. After all, it is one thing to say, “What you do not want done to yourself, do not do to others” and quite another to say, “What you want done to yourself, do to others.” For although both are reciprocal, the first rule merely requires restraint, while the second requires intervention. That is, the first says that if John doesn’t want Joe to hit him, then John must refrain from hitting Joe, while the second says that if John wants Joe to feed him, then John must feed Joe. As religions have differed in this regard, we note, for example, that as with Confucianism,  Judaism holds to the negative rule, saying, “What is hateful to you, do not to your fellow men,” adding an emphatic, “that is the whole Torah, while the rest is the commentary thereof.” Christianity, on the other hand, adopts the positive rule, saying, “Whatever you wish that men would do to you, do so to them,”  while Islam adopts both, including, “Do unto all men as you would wish to have done unto you; and reject for others what you would reject for yourselves.” Insofar as the positive golden rule is adopted on a purely voluntary basis, it is perfectly acceptable in society. When the positive rule is commanded, however, then insofar as that society would be free, it is not, and therefore insofar as that society would be civil, it is not. For when the members of society are prevented, beyond the constraints of the negative golden rule, from acting freely and of their own accord and are instead forced to obey this or that positive rule, they are being required to do unto others what they might not want to do and/or be done unto as they might not want to be done.  To one degree or another, then, involuntary servitude must be the inevitable result of this form of positive rule. And as involuntary servitude is the very definition of slavery, it follows that the members of such a society are accordingly enslaved, the golden rule be-ing effectively turned into lead due to the fact that it is applied via “the substitution of coercion for voluntary actions.” To such coercion we therefore give the name positivism, this being the already established term as it relates to the so-called severability thesis, which posits that law is not derived from morality, asserting on the contrary that “law and morality are conceptually distinct.” Furthermore, we use the term positivism regardless of whether it manifests itself on a religious or a secular basis. Thus is Marxist positivism – “From each according to his ability, to each according to his need” – no different than the positivism of Christian the-ocracies of the past or Muslim theocracies of the present. And while it might be assumed that today’s presumably democratic societies are not positivistic, it will be seen upon ex-amination that they are, and thoroughly so, as we address next in “Money and the State,” followed by “Law and the State.”       1) John 13:3-14 and, in the same vein, Mathew 5:39-42.

Simon Black Explains How To Diversify Sovereign Risk Posted: 26 Dec 2010 06:17 AM PST Simon Black, aka Sovereign Man, who recently has been a frequent guest on the pages of Zero Hedge, was interviewed by The Daily Crux, and explains why in a world of relentless printing of credit money, and thus a surge in global sovereign debt, sovereign risk is rapidly becoming the first and foremost risk factor for investors. Courtesy of his extended travel experience, Black, who visits 50 countries each year and actually performs due diligence, summarizes his thoughts on all those pundits who base their macro views on a tourism brochure: "I spend my life trying to put my boots on the ground in as many places as possible to really see with my own eyes what's going on in the world and what the opportunities are, rather than take some idiot's recommendation on Fox Business News who doesn't know his ass from his elbow." In addition to getting some more background on Black, who is oddly low-profile in a world filled with media whores, here is one chance to evaluate key risks vicariously courtesy of a man who actually has "been there, done that." Below is the introduction from Daily Crux editor Justin Brill: As you take time to relax and reflect this holiday season, we hope you'll also take a moment to think about the coming year. With America's ballooning debt, the Federal Reserve's reckless "money-printing," and our government's increasing intrusiveness into our daily lives, the risks to you, your family, and your wealth have never been greater. So this week we sat down with Simon Black of Sovereign Man. Simon and his team specialize in asset protection strategies and global financial intelligence. Read on to learn why asset protection is no longer just for the very wealthy, but something everyone needs to seriously consider. Good investing, Justin Brill Managing Editor, The Daily Crux www.thedailycrux.com   Full Daily Crux Sunday Interview: You're ignoring one of the biggest risks in the world right now The Daily Crux: Simon, longtime readers of The Crux have seen a lot of information from folks like yourself, Casey Research, and even our colleague Porter Stansberry, about the importance of asset protection. Yet many still haven't taken steps to protect themselves and their families. Can you explain why this is something that everyone should consider right now? Simon Black: The way I always explain it to people is... let's say you're an American. You're a U.S. citizen, you're a U.S. taxpayer, you live in the United States, you work in the United States, and you own your property in the United States. Your savings are in the United States. If you own gold, you hold it in the United States.  You have investments in the United States. You structure your company or your business through a corporation registered in the United States.  Now imagine just one little thing goes wrong. Maybe some bureaucrat who works for a three-letter agency decides that you violated some obscure law. Or maybe your neighbor's knucklehead kid falls into your swimming pool. There's a whole host of things, big or small, that can happen. If you have all of those assets and interests tied up in the United States, you're in big trouble. Any one of these people, whether it's a judge or a bureaucrat, can just click a couple keys on their keyboard to freeze your accounts and confiscate your assets. In a lot of these cases, particularly when they're administrative cases, it's a "guilty until proven innocent" system.  What they do is basically assume you're guilty, take away all your assets with which you could prove your innocence, and say, "Well now that we think you're guilty, it's up to you to prove that you're innocent." It's a really scary proposition. This is what we call sovereign risk. Sovereign risk is when you have all of your assets and interests in one basket, in one country. And as you can see, it's not just a concern for the very wealthy, like many people assume. Nor is it only a concern for criminals, "gold bugs," or those who think America is headed for a dollar crisis... though that's a serious concern as well. This is something everyone needs to consider... Ask yourself, "What would I do if this happened to me? How would I put food on the table for my family?" The simple solution to this problem is to diversify... to just spread that risk around a little bit. Fortunately, there are many legitimate options out there, and that's what we focus on at Sovereign Man. So if you look at the same scenario again, where your neighbor's knucklehead kid falls into your swimming pool and somebody wants to sue you and take your money, take over your business, and take your assets... what happens if your money is in Hong Kong? What happens if your business is structured in Nieves? What happens if you own foreign property instead of U.S. property, and it's owned through a trust in the Cook Islands? With these types of things, nobody can come after you anymore. And I'll tell you, in an environment like this – where society is increasingly litigious, and government and individuals alike are increasingly going after people that have any assets whatsoever – you'll sleep a lot better at night knowing those assets and interests are diversified... knowing they're spread across different geographies where nobody can really touch them anymore. Crux: For readers who may not be familiar with your work, can you give us a little background on yourself and your expertise in this area? Black: Honestly, I don't like to talk about my background very much. I went to West Point and I used to be an intelligence officer in the army and all that kind of thing, so people try to associate me with some spooky CIA guy, which isn't the case at all. I guess the easiest way to put it is I'm an international investor and entrepreneur.  I'm what some people would consider a permanent traveler.  I have no fixed home, I speak multiple languages, and I travel all over the world. I've been to hundreds of countries. I probably go to 50 countries each year. Just this year I've been to six continents.  I do business all over the world.  I buy property, I invest in things, and I start businesses...  The more interesting and more exotic, the better. Basically, I spend my life trying to put my boots on the ground in as many places as possible to really see with my own eyes what's going on in the world and what the opportunities are, rather than take some idiot's recommendation on Fox Business News who doesn't know his ass from his elbow. That's been my life now for the last many years, so I've developed real world expertise in this area. And I've seen that while things in the West are really difficult, there's literally a world of opportunity out there. Crux: If there are some readers out there who have decided to take action and protect their assets, how should they begin? Can you give us a couple simple first steps that people can take to get started? Black: Well, first – and I just told my readers this the other day – I think your colleague Porter Stansberry has put together a very good overview of the importance of asset protection today – along with the basic steps everyone needs to take – in his "End of America" video. I thought he captured it really well, so I've been recommending everyone watch it. [Editor's Note: If you haven't seen the video, you can view it here.] Now assuming you've taken care of those basics – and I'm sure many of your readers already have – you can begin to focus on sovereign risk. After all, what's the point of making all this money in the stock market or having a bunch of gold and silver, if your government increases tax rates exponentially, starts seizing assets, or decides to make gold illegal again? To me, that sovereign risk is the biggest risk you face, and so the thing to do is to start diversifying those assets and interests overseas. And I think the best and easiest way for everybody to start doing that is with a foreign bank account. There are three big reasons why you want to do this. The first is that you instantly get more control over your own money. You can free yourself from the risk of confiscation or having all your assets frozen, because now some of your accounts are overseas.  If the United States, for example, imposes capital controls, you won't be subject to those. The second reason is that many foreign banks are actually much safer.  Many banks in the United States are still technically insolvent, but you have banks in places like Singapore, for example, which has never had a bank failure, and doesn't have to pump up its banks with funny money. These are banks with very strong and healthy balance sheets, where you're much better off banking than you are in the United States. And the third reason is you get a lot of exposure to things outside of the U.S. dollar, which – as most of your readers probably understand – is not exactly a sound currency these days.  When you bank overseas, you get into some other currencies that have better fundamentals, so it's an easy way to diversify your assets from the U.S. dollar.  Best of all, it's surprisingly easy to do. It does take a little bit of legwork to track down and contact  various banks, but almost anyone can do it. We talk about this sort of thing all the time in our letter. And of course, for anyone who wants to keep things as simple and easy as possible, we teamed up with Casey Research to create our Going Global report, that details which banks to call and exactly what to do. Crux: Sounds good. Any parting thoughts? Black: Well, the biggest thing I try to get people to understand is much of the western world – and the United States in particular – tends to be a very insular place... sort of inward looking. So it's easy to be influenced by reports from the media and government and think there's doom and gloom all over the world. But the fact of the matter is, one of the biggest "big picture" things that I would encourage people to understand is the world is a huge place, and there's actually a ton of opportunity out there. I would encourage people to open their minds to the opportunities that are overseas, and not just for asset protection or diversification. People that are unemployed, for example, and can't find a job... they should realize that there are many places in the world where they could go and find a job right now, whether it's Singapore, Hong Kong, Mainland China, or Chile. There are just so many places where professional, talented people can go and find a job.  If you're looking for really fantastic investment opportunities, or you're an entrepreneur looking for great business opportunities, why not take a look at one of the thriving economies overseas? Places where the governments make it really easy for you to do business, and they don't tax and regulate you like crazy... There are several of them around the world.  So I'd really encourage people to just start looking at opportunities overseas. The things they've heard on television and in the newspapers, most of that stuff's not true. When you actually go and travel overseas, and see with your own eyes, you find out most places are not anything like what you expected, and most of the time it's a fantastic awakening. Crux: Thanks for talking with us, Simon. Black: Thank you. Good talking with you.

Ernst & Young Charged with Collusion in Lehman's Fraud Posted: 26 Dec 2010 03:57 AM PST New York Attorney General Andrew Cuomo filed a civil suit Tuesday in the state’s Supreme Court charging the giant accounting firm Ernst & Young with complicity in massive fraud committed by Lehman Brothers in the months leading up to the investment bank’s September 2008 collapse. In a statement, Cuomo said that Lehman used an accounting gimmick that “was a house of cards business model designed to hide billions in liabilities in the years before Lehman collapsed.” He continued, “Just as troubling, a global accounting firm, tasked with auditing Lehman’s financial statements, helped hide this crucial information from the investing public.”

Will Gold fall in a Real Recovery ? Posted: 26 Dec 2010 03:52 AM PST Gold Forecaster

Charting 2010, Part 2: Currency - Printing Money, FX Manipulation And Pricing Unleaded In Bits Of Bacon Posted: 26 Dec 2010 03:38 AM PST No summary of 2010, visual or otherwise, would be complete without an extensive overview of what pundits call Monetary Stimulus, quantitative easing or Large Scale Asset Purchases, and the peasantry calls, just as correctly (with a few footnotes), the printing of money. If there are two words that define what we had an absence and an abundance of in the past year, those would be jobs, and money. As some of the key jobs-related charts were presented yesterday, below, once again courtesy of BusinessWeek, are the main charts that among other things demonstrate the various currency manipulation playbooks, the price of gas in bacon and other products, the annotated strength of the dollar through time, and what is actually printed when the Fed does print money. The first chart shows the progression of dollar strength (and weakness) with an annotation for contemporaneous global events. What is ironic is that while everyone realizes the world is still in a very week position, the core debate over who is weaker - Europe or the US, is sure to provide many hours of entertainment in 2011. And as a bonus, the man whose policies, together with those of Bernanke, are instrumental in just how weak the dollar gets, is presented in his key natural states: from lying just every so slightly, to lying a lot, to lying profusely to save his life, to lying at such a rate, it would make those whose pants are burning, blush with envy. And now you will know how to distinguish the four...  The next chart deals with the actual money printing, but not in an deeply philosophical manner, one in which hours of debate are wasted over whether trillions in excess reserves are actually printed money (even though the last time someone acquired USTs, MBS, and soon Munis and ETFs, with pixie dust, the legal consequences were not all that palatable). Of the just over $300 billion in actual currency printed in 2010, the vast majority was in $100 bills, next up was $20s, followed by $5s, $10s, and lastly, singles. Not a single $50 bill was printed. Also noted: the amount of cash in corporate America. Of particular interest: GM has more than half of its market value, or $27.5 billion sitting in cash. Lastly, and this not come as a surprise to many, the money multiplier: the money supply divided by the monetary base, is at near record lows, courtesy of the $1 trillion in excess reserves. Another popular meme in 2010 was pricing X in Y, most often the stock market in gold, in which basis it is still down for the year, as gold (not to mention silver), despite the short memory of many, is by and far the best performing asset class of 2010. Those who followed our advice in early 2010 to avoid stocks and to invest in gold, are ahead of most. The chart below takes a comic approach to this relative performance, showing how much the price of gas changed when priced in other "currencies." Last, and probably most interesting, is the graphic presentation of the currency manipulator playbook: in a world in which Ben Bernanke knows very well he has little competition when it comes to doing as he chooses with the world's reserve currency (for now), other sovereigns are forced to come up with their unique responses. The playbook below shows all the various defensive tactics adopted so far. Luckily, few offensive plays have been established to date. We doubt that will be the status quo for a long time. And as John Taylor and many others have pointed out, now that the fiscal "stimulus" of the payroll tax has been exhausted in a few short weeks courtesy of the jump in crude oil, and any further fiscal intervention not likely to occur unless Congress wants another incumbent bloodbath next time around, as Americans are tired of subsidizing banker lifestyles, expect to see many additions to the FX manipulation playbook, as the year progresses and monetary intervention continues to be the only direct way of making sure every new banker bonus year is a record one is via the Fed and its ongoing dollar printing-cum-debasement. That said, should the bankrupt European house of cards continue to wave a white flag of surrender every 3 months, the race to the bottom may not have a clear winner well after 2011 is also history. All charts courtesy of BusinessWeek

What Will 2011 Bring For Paper And Physical Silver Posted: 26 Dec 2010 01:29 AM PST Hmmm…this is one of those questions that could make you big wealth – if you knew the answer already now. I’m no prophet but can make predictions only based on the analysis of freely available info. No problems that escalated in 2010 regarding financial systems, debt, collapsing of real estate sector…has been solved. In fact [...]

The Derivatives Monster That's 9X Bigger than the Global Economy Posted: 25 Dec 2010 10:35 PM PST I assume that you, as an intelligent person who understands that the treacherous, greedy, vampire banks creating so much excess money means We’re Freaking Doomed (WFD), are Up To Your Freaking Ears (UTYFE) in gold, silver and oil, and you have had it UTYFE with your family always complaining about how you spend all the family’s income on gold, silver and oil instead of luxuries, family vacations, adequate food, clothing, medical care, dental care, blah blah blah, the list goes on and on.

Jim's Mailbox Posted: 25 Dec 2010 10:02 PM PST Jim, China has been fully hedged against the humpty dumpty dollar for quite some time as the spending sprees continue. CIGA BJS Dear BJS Yes, they have no dollar risk whatsoever but the average imbecile on financial TV has no clue. Regards, Jim Venezuela signs US$40-bln worth pacts with Chinese oil giants Updated: 2010-12-07 10:25 Venezuela's Ministry of Energy and Petroleum has signed six contracts with China National Petroleum Corp, China Petrochemical Corp or Sinopec Group and China National Offshore Oil Corp for a combined contract value of US$40 billion, bringing the three Chinese petrochemical giants a significant presence in the South American country. CNPC, the parent firm of PetroChina Co Ltd, inked one of the six deals to explore Junin 4 oilfield with a designed crude oil output capacity of 400,000 barrels per day. The Chinese company has a 40% stake in the project that will cost US$16 billion. Chinese oil giant, Sinopec Group, which controlls Sinopec, will jointly develop Junin 1 and Junin 8 blocks with Petroleos de Venezuela. Each of the two oil blocks will daily yield 200,000 barrels of crude oil. A refinery will also be built by the two partners. CNOOC Ltd's parent China National Offshore Oil Corp will develop a 1.2 million-cubic feet natural gas project in Venezuela, sources reported. More…

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