Gold World News Flash |
- Gold Seeker Closing Report: Gold Gains Over $20 and Silver Surges to A New 30-Year Closing High
- Gold Price Headed Higher, Must Close Above $1,416 Must Not Drop Below $1,385
- TUESDAY Market Excerpts
- Facebook's 56 bn. dollar private market value
- The dollar weakened versus its counterparts in Australia, New Zealand and Canada, as rising commodity prices boosted demand for currencies linked to raw materials exports.
- Gold and silver are breaking out today, and U.S. Treasury Bonds are again plummeting following another nearly failed bond auction (which of course would have been worse if not for QE buying by the U.S. government).
- Gold's best 2010 forecaster says prices to reach $1,630 in 2011
- Gold Daily And Silver Weekly Charts
- Behind the Retail Cheer
- Swiss central bank unable to end ‘burden' of record franc
- Investing in Gold Ahead of the Chinese
- 3 Things that Could Halt Gold’s Run
- Hourly Action In Gold From Trader Dan
- In The News Today
- Another Hole In The Bond Bubble As 30 Year Gets Reacquainted With Gravity
- Trader Dan Comments On Soaring Commodity Prices and Plunging Bond Prices
- Using International Valuation Standards to Determine the S&P-500 Fundamental Value
- Gold's Relatives: Mining Stocks
- Loonie hits parity with U.S. dollar
- Simon Black's "Best Of 2010": Explains Why Planting "Mutiple Flags" Is Crucial For Our Insolvent Age
- Never Say Never
- More Risk Appetite for Fiscal Gluttons
- “The double dip in home prices which started in June, is persisting.”
- This past week in gold - Dec 27, 2010
- Gold & Uranium: Rules Of The Range
- The Mercenary Geologist’s Gold Review: Q4 2010
- We Will Have an Upside Explosion in Gold: Richard Russell
- Testy Tuesday – Topping or Popping?
- As Clearly Forecasted On BoomBustBlog, Housing Prices Commence Their Downward Price Movement In Search Of Equilibrium Scraping Depression Levels
- The Year of Living Quantitatively
- Special Report on Gold
- The Impossibility of a Gold Bubble
- Featured Coin News and Articles for December 19-25, 2010
- Silver Shorts
- The Fed's Monetary Policy is About to Run Into a BRIC Wall
- Class action against Morgan, HSBC specifies silver manipulation mechanism
- Strong foreign banks splurged on, profited from Fed's emergency credit
- GATA's lawsuit for Fed's gold documents slogs on
- Yellow Flag Time for Silver
- How to Get an 83% Discount on a Rare Silver Coin
- Inflation Heard Round the World... UFOs and NASA: The Meme Goes On
- Gold stays up after Case-Shiller
- Weathering the Storm With a Diversified Portfolio
- The Morning Gold Report
- Gold hits two-week high over $1400 as USD sinks
- Gold Tertiary Trend Headed Higher as Gold Consolidates at Higher Levels
- Mike Ruppert: We Are Weeks Away From Collapse
- In Praise of Paul Krugman
- Gold & Uranium, Rules Of The Range
- Gold surging to $1400 on strong Asian buying
| Gold Seeker Closing Report: Gold Gains Over $20 and Silver Surges to A New 30-Year Closing High Posted: 28 Dec 2010 04:00 PM PST Gold climbed higher throughout most of world trade and ended near its early afternoon high of $1406.15 with a gain of 1.62%. Silver climbed to as high as $30.313 and closed with a gain of 3.45%.
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| Gold Price Headed Higher, Must Close Above $1,416 Must Not Drop Below $1,385 Posted: 28 Dec 2010 10:35 AM PST Gold Price Close Today : 1405.20 Change : 22.80 or 1.6% Silver Price Close Today : 30.297 Change : 1.062 cents or 3.6% Gold Silver Ratio Today : 46.38 Change : -0.905 or -1.9% Silver Gold Ratio Today : 0.02156 Change : 0.000413 or 2.0% Platinum Price Close Today : 1757.20 Change : 21.60 or 1.2% Palladium Price Close Today : 786.50 Change : 17.35 or 2.3% S&P 500 : 1,258.51 Change : 0.97 or 0.1% Dow In GOLD$ : $170.29 Change : $ (2.48) or -1.4% Dow in GOLD oz : 8.238 Change : -0.120 or -1.4% Dow in SILVER oz : 382.07 Change : 0.54 or 0.1% Dow Industrial : 11,575.54 Change : 20.51 or 0.2% US Dollar Index : 80.37 Change : 0.007 or 0.0% I hope each of you had an unforgettable Christmas, and wish you all a merry Christmastide (there are 9 days left) and a good slide into the New Year. The reasons given for today's SILVER PRICE and GOLD PRICE jump by the official state news agency -- Whoops! Sorry, sorry, I meant the US corporate media -- was that when China raised interest rates over the weekend (remember those government surprise parties I mentioned last week) silver and gold were supposed to go down. Yesterday they were flat, but today, in the absence of their fall, all the shorts (who had sold gold anticipating the Chinese interest rate reduction would pull the rug out from under gold) got caught, well, short. By the time a much bruised Comex closed, gold had risen $22.80 to $1,405.20 and silver to 3029.7c, up 106.2c. Where does that leave us? Gold merely rose to the resistance ceiling at $1,406, but not to the last high at $1,415 (6 Dec). Silver, however, smashed its 7 Dec high of 2974.80 to reach a new all-time high for this bull market at 3029.7c. GOLD/SILVER RATIO fell to a new low for this move at 46.38. The Nice Government Men must be sweating bullets and razors. They like tidy endings to years, because so many calculations are made from those year-end figure, and it appears that instead of keeping gold as low as possible to year end, the correction may have ended and silver and gold will rise -- are rising -- immediately. Options also expired today, another force moving metals upward. On the five day chart the GOLD PRICE has clearly broken out to the upside, from a double-bottom base at $1,370 last Thursday and over the weekend, and cleared all resistance between $1,385 and $1,406. Can't say anything about that except, "Headed higher." Of course, gold must confirm by closing above $1,416 and must not drop below $1,385, but other than that, "Headed higher." The SILVER PRICE 5-day chart mirrors gold, but with different numbers. It broke through resistance at 2950c and ran to a new high at 3029.7c. Rising 106.2c in a day pretty well points to a strong breakout. 3400c is my next target, and might mark the top for the move, which points to a $1,475 - $1,530-ish target for gold. It appears that the correction has ended for silver and gold and that the last leg up I have been expecting for this intermediate move (NOT ultimate move for the bull market) has arrived. Peak should hit sometime from mid- to end-January. Chinese interest rate reduction announcement did nothing to the US dollar index. It barely moved today, up 7 basis points to 80.373. Stocks are piddling, or more likely, stalling. Dow closed up 20.51 points today at 11,575.54 while the S&P500 rose a gigantic 0.97 to 1,258.51. This is as good as it gets for stocks. After the new year begins, sobriety and reality will once again take hold, and that can't bring joy to Wall Street. Readers have asked me why I quote silver as I do, in cents rather than dollars. Answer? Because that's the way the Comex quotes it. If it makes you queasy, just move the decimal point left two places. During the Twelve Days of Christmas (Christmas thru Epiphany, 6 Jan) our office will be working only four hours a day. Please be patient, leave a voice mail or send us an email at helpdesk@the-moneychanger.com. Thanks for your understanding. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com Phone: (888) 218-9226 or (931) 766-6066 © 2010, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't. 
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| Posted: 28 Dec 2010 10:25 AM PST Gold futures climb on currency concerns, short covering The COMEX February gold futures contract closed up $22.70 Tuesday at $1405.60, trading between $1383.10 and $1407.20 December 28, p.m. excerpts: see full news, 24-hr newswire…
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| Facebook's 56 bn. dollar private market value Posted: 28 Dec 2010 09:55 AM PST BUYER BEWARE: Facebook's $56 Billion Valuation Smells Like A Scam To This Guy MK: I have been writing about the private market for Facebook and Zynga and other social networking sites (web 2.0) that are trading on the private market exchanges – a new thing in itself – trading Reg. D – insider stock amongst [...]
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| Posted: 28 Dec 2010 09:13 AM PST Dollar Weakens Against Commodity Currencies Amid Slow Growth Share this:
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| Posted: 28 Dec 2010 09:09 AM PST All, Despite some of the most maniacal market rigging I have ever seen, across the board, in this past month, The Powers That Be are slowly but surely losing their battle to influence perception by holding down gold and silver while propping up stocks, bonds, and the dollar. Gold and silver are breaking out today, [...]
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| Gold's best 2010 forecaster says prices to reach $1,630 in 2011 Posted: 28 Dec 2010 08:59 AM PST by Nicholas Larkin The CHART OF THE DAY shows gold's 26 percent gain this year and the Dec. 7 record of $1,431.25 an ounce. The metal may climb as much as 18 percent in 2011, said Kendall, an analyst at Credit Suisse Group AG in London. In this year's London Bullion Market Association survey, Kendall predicted this year's high within 0.1 percent. "We're still in an era of unusual financial market instability and stress," said Kendall, who was at Mitsubishi Corp. (U.K.) Plc when he made his gold forecast for the LBMA. "We're going to stay with very low to negative interest rates in real terms and that's also very supportive for gold." In China "there's increasing imports of gold and a real boom in retail investment in physical gold there," Kendall said. "Inflation is definitely playing into the market" in China, he said. [source]
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| Gold Daily And Silver Weekly Charts Posted: 28 Dec 2010 08:30 AM PST | ||||
| Posted: 28 Dec 2010 08:22 AM PST by Addison Wiggin - December 28, 2010
Rags make paper Fitting, eh? With such wisdom in mind, we delve into the holiday retail numbers that have much of the financial media abuzz this morning.
"Increasing confidence has freed up more money from savings," adds Michael McNamara, VP at SpendingPulse, himself impressively confident. "We pretty much put a bow on what has been a positive season across a number of retail areas. We are seeing this momentum building and being sustained."
Alas, as our copy of Economics in One Lesson churlishly reminds us, it's not necessarily that which is "seen" that is important, but that which is "not seen."
If the unemployment rate -- even the one gamed by the Bureau of Labor Statistics (BLS) -- is nearly twice as high now as it was then... how can holiday sales be at housing bubble levels? Especially if consumers are not resorting to plastic the way they have in the past? Oh, that's right. Foreclosures took a breather just before the holiday. In fact, they fell 21%, to a two-year low, in November, thanks to the moratoriums the banks imposed in response to the "robo-signing" scandal.
You can blow a lot of money on stuff if you can live rent-free. As 2010 progressed, the pace of foreclosures picked up -- until the "who holds the note" scandal took hold. Banks stopped foreclosing, mostly as a cynical PR gesture. But in 2011, that ready source of consumer spending is bound to dry up... lest the banks enter another "balance sheet recession" and come a-beggin' for bailouts once again. Just for giggles, let's check in on our framed gift again: Rags make paper Seems the economic cycle is momentarily suspended somewhere between lines 4 and 5.
For comparison, consumer confidence during this time in 2005 rang in at a feverish 103.6. If you want access to all of our editors' predictions for 2011 fully stocked with their very best ways to play the trends, we'll be issuing that list a week from today, Tuesday Jan. 4, 2011, to members of the Agora Financial Reserve. Not a member? Look here for details and discounts.
Six of the 20 metro areas surveyed reached their lowest price levels since the housing bubble popped – Atlanta; Charlotte; Miami; Seattle; Tampa; and Portland, Ore. Overall, home prices remain at mid-2003 levels... while household income is still stuck at 1998 levels. One of those two things is going to have to give before they're back in balance. We're probably not sticking our neck out too far here: Incomes won't be going up in 2011. So... housing prices have further to fall.
With many traders on vacation, the U.S. stock market is taking the news in stride. Usually the China Sneeze Play becomes an instant factor, as traders freak out at the thought the Chinese economy's fever might cool off. But the major indexes were generally flat yesterday, and they remain so today.
That's 11% less than the first allotment of 2010 -- 11% less for all the non-Chinese makers of mobile phones, catalytic converters, wind turbines and everything else that relies on rare earths. The real question is what happens in the second half of 2011. This year, the second half brought a 72% cut in exports, and brief embargoes to Japan and the United States. Since China presently controls 97% of world production, that brought a surge in the prices of rare earths… and the shares of companies hoping to break China's monopoly. The rare earth story Byron King first told us about in early 2008 is coming to fruition… and Reserve members are reaping the rewards: gains of 59%... 109%... even 162%... from recommendations in two of our premium services. To learn about what you get with access to our entire suite of services, look here.
Silver's up nearly a buck, to $30.22.
The IMF has been, well, less than transparent about who bought the rest. India's neighbors Sri Lanka, Mauritius, and Bangladesh each bought a few tons each, but that's about all we've been told. Regardless, 2010 is set to be the second straight year in which central banks have been net buyers of gold, as the world's reserve currency looks ever more iffy.
After Astor died inconveniently just as the housing bubble was bursting in 2007, her son listed the spread for $46 million. By 2009, it was $34 million. This year, $24.5 million. Now the New York Post reports the family has taken an offer "in the high teens." That might not be good enough for the co-op board, which we understand is notoriously persnickety. Can't have someone slumming at $18 mil, you know. A less posh unit in the same building once occupied by the late William F. Buckley Jr. recently sold to a Rockefeller scion for $8.75 million, itself a steep haircut from the original $12 million.
"The world is paving new roads with BRICs."
"Happy TRAILS!"
The name "is a bit long," the reader who submitted it admits, "but with the right font, it could work." The 5: You think? "Your analysts have made me lots of money," the reader continues helpfully, "by bringing me out of my investment comfort zone. My formerly white bread portfolio now includes companies with operations in Australia, Namibia, Poland, Russia, Tanzania, Africa, Mexico, Albania, Canada, China and Brazil, to name of few of the sound investment locales I've been introduced to through my Reserve membership. "Thanks for the great service and insightful research." The 5: No... thank you. Without your membership, sending analysts off to the far-flung reaches of the globe in search of better returns would not at all be possible. It's worth pointing out, we open the Reserve to new members only twice a year... if that. This week is one of those times. It's also the last time we're making membership available at the current price. Since we've launched two new services within the last four months and we expect to add several new ones in the coming year, the value we're offering this time around is simply unbeatable. Take advantage of this offer while it's still available. Cheers, Addison Wiggin P.S. Based on your existing subscriptions, you are likely entitled to discounts on a Reserve membership already worth thousands of dollars. Call John Wilkinson at (866) 361-7662 to find out exactly how much you can save. P.P.S. We'd also like to remind you that your free copy of Economics in One Lesson is still available, right here, as is your 60% discount on all books in the Laissez Faire catalog, provided we still have them in stock. Your free book and massive inventory clearing discount is available until the end of this week, so if Santa forgot to bring you the economic tomes you'd requested for Christmas, there's still time to take advantage of the next best thing. Check it out now!
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| Swiss central bank unable to end ‘burden' of record franc Posted: 28 Dec 2010 08:17 AM PST December 29, 2010 (Bloomberg) — Swiss central bank President Philipp Hildebrand, who ended 15 months of intervening in foreign-exchange markets this year, may prove powerless to stop the franc from extending a record rally that he calls a "burden". … Switzerland's currency, a haven in times of economic turmoil, has strengthened 17 per cent against the euro this year amid concern the fiscal crisis engulfing Greece, Ireland, Portugal and Spain will curb growth in the 16-country region and may force some nations out of the monetary union. The franc's gain against the euro is an additional "burden" for Swiss exports, which account for about 50 per cent of gross domestic product, Hildebrand told reporters in Zurich on December 16. Growth in Switzerland's $492 billion economy is likely to be "significantly lower in the quarters ahead," partly because of the currency's strength, he said. [source] RS View: By intervention and word alike the Swiss Central Bank president candidly admits that its strength has been an unwelcome economic feature of the Swiss monetary unit. Clearly, there is no desire on his part to see the international community attempt to make larger use of this "strong" Swiss franc among it's reserve assets, as such usage would tend to propel it higher. And yet, despite the franc's current strength, as shown on this page priced in the Swiss currency among others gold has been stronger for longer. The fact that no national politician or central banker anywhere in the world has come out of their office to advocate against gold's strength speaks volumes regarding its unique and profound suitability for the role of primary reserve asset which is currently up for grabs.
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| Investing in Gold Ahead of the Chinese Posted: 28 Dec 2010 06:52 AM PST There are a lot of things in this world that I do not understand, and perhaps it is because of this persistent befuddlement that, for some mysterious reason, I think it is Highly, Highly Significant (HHS) that the Chinese Gold & Silver Exchange is planning "a first"; an international gold contract denominated in renminbi. Agora Financial's 5-Minute Forecast notes that "Right now, the Hong Kong-based exchange settles all its trades in Hong Kong dollars," which should be enough to get the job done, you would think. So why a new international gold contract denominated in Chinese renminbi? I don't know, which is not unusual because I actually know so little about anything, but The 5 says, "Adding renminbi to the mix could boost the exchange's trading volume by 20%, to a daily total of $6 billion," which I assume means that commissions, fees and money made by middlemen would increase, for one thing! Hahaha! My shallow cynicism aside, all of this comes at a time when "skyrocketing demand ...
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| 3 Things that Could Halt Gold’s Run Posted: 28 Dec 2010 06:22 AM PST By Jordan Roy-Byrne, CMT, TheDailyGold Normally we write about the things and conditions that cause precious metals to rise. While these things may be obvious, the corresponding rise in the bull market will not always be consistent and linear. Small and large corrections will occur along the way. Some will be purely technical while some have real drivers. There are three things which can precede a deep correction or consolidation in the precious metals complex. Other Markets Strengthen Precious metals perform best when strongly outperforming most other markets. They are at times an "anti-investment." In other words, when stocks and/or commodities are healthy, there is going to be less demand for precious metals. This doesn't mean precious metals will decline, it just means they won't rise or rise as much. Remember, stocks performed especially well from 2003 to 2006. Precious metals still performed well but not as well as in 2001 to 2003 or in 2007. In early 2009, Gold neared $1000 but stocks were set to begin a huge bounce, which evolved into a cyclical bull market. The first six months of said bounce caused Gold to consolidate before it would eventually break $1000. Currently, stocks are performing well as are commodities led by energy. As a result, some investors feel they won't need to invest in Gold if the "conventional" options are performing well. I expect this to continue in the early part of Q1 in 2011. This is partly why the precious metals complex is consolidating or correcting. The Economy Recovers The biggest issue and driving force for the bull market in precious metals is the sovereign debt situation. Inflation results from excess money and credit growth while hyperinflation or severe inflation results from the inability to grow out of the debt burden. The latter is more tied to the economy. It happens very quickly in small countries with small borrowing power. They accumulate too much debt, their economy weakens and as the economy fails to grow quickly, the market demands higher interest rates which eventually leads to default or printing money. Monetizing the debt (also known as printing money or quantitative easing) is one way to forestall the rising rates. This is what we are doing and what Europe and Japan have done. We can do it because we have a massively huge bond market compared to Greece, Argentina, Iceland, etc. For those who can't figure out why Gold is rising or why this is a bull market, there is your hint. If the economy would grow fast enough then debt to gdp would start to come down and the budget would come under control. This would lead to lower interest rates. Problem is, the US economy is growing well below trend in this "recovery." Debt and interest service costs continue to grow faster. We would need to see above trend growth sustained for several years. If you believe this is reasonably possible or likely anytime soon, then I guess you believe pigs can fly. Technical Selloff Silver in 2004, 2006 and recently, provides the best examples. The market reached a level where it was well above the moving averages. There was little chance of the market avoiding a correction or consolidation. The same could be said of Gold in 2006 and Q2 of 2008. Since late 2008, Gold has followed a different pattern. It has gained for three to four months then corrected for one or two. This action is far more sustainable then a vertical move for several quarters. However, silver has reached a technically overbought condition, so it will need to consolidate for at least several months. Gold is less vulnerable at present. Conclusion Presently, other markets are performing better and that is providing resistance against a rise to new highs in precious metals. Silver is also technically overbought. A consolidation is needed to digest the huge gains and bring the market back to more of an equilibrium. These are some of the conditions we always look for and are thinking about as 2011 dawns. We are gold bulls but realize corrections and consolidations are inevitable. Our goal is to make subscribers money but help them make money in a timely fashion. If this interests you, we invite you to consider a free 14-day trial to our service. Good Luck! Jordan Roy-Byrne, CMT
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| Hourly Action In Gold From Trader Dan Posted: 28 Dec 2010 06:20 AM PST Dear CIGAs, Click chart to enlarge today's hourly action in Gold in PDF format with commentary from Trader Dan Norcini
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| Posted: 28 Dec 2010 06:18 AM PST Dear CIGAs, Credit Suisse is forecasting the gold price of $1630 for 2011. Remember how dumb that sounded seven years ago? I was called every name in the book by the shorts in gold at the $300 and $400 level. The greatest compliment is imitation. It looks like the hoard of experts that were negative or nowhere to be found up to gold at $1000 are complimenting me like mad. The real price Angel is $1764. There is no solid analytical way to get to $1650 so those guys are definitely complimenting me. The Financial Gang is so full of rotten, selfish, amoral chumps.
Jim Sinclair's Commentary Remember when these guys were bearish as hell, holding the world's largest short of gold OTC derivatives? This is what happens when a company is over populated by attorneys and accountants. "The CEO of Barrick Gold, the world's biggest gold miner, says his company is expanding digging operations as central banks increase gold purchases."
Jim Sinclair's Commentary Not exactly dollar positive. Boomers Turn 65 in January, Threaten to Bankrupt Medicare The baby boomer generation, which starts turning 65 on Jan. 1, threatens to bankrupt the Medicare program, according to a report by the Wisconsin Rapids Tribune. As more boomers enter the program, Medicare spending will increase 5.8 percent a year, reaching $929 billion by 2020. When the last of the boomers turns 65 in 2030, the Medicare population will have nearly doubled from 47 million to 80 million. The combination of more beneficiaries and medical inflation will be disastrous unless the system can be overhauled, an expert at the Commonwealth Fund said. Policymakers will have to figure out how to provide healthcare more efficiently. Keeping boomers' Medicare costs low should involve improving their healthcare before they qualify for Medicare, said an expert at National Institute on Aging. Most Americans ages 50-64 experience more than one chronic illness, such as arthritis, cancer, diabetes, heart disease, high blood pressure or high cholesterol. They need expert care because treating one condition could harmfully affect another.
Jim Sinclair's Commentary Peak oil and a weak US dollar underscores gold at $1650 or better. $5 Gas In 2012, Ex Shell President Predicts NEW YORK (CNNMoney.com) — The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012. In an interview with Platt's Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.
Jim Sinclair's Commentary The Green Hornet says that although this is under the radar of financial TV, this is one of the biggest dollar risks out there. US cities at risk of bankruptcy Next to the housing crisis, some economists say cities declaring bankruptcy is the biggest threat to the U.S. economy in 2011 More than 100 cities could go bust in the new year derailing the economy in America. In Michigan, a small city called Hamtramck says it only has funds to operate until March first. City officials have slashed money for boarding up abandoned houses, cutting grass and no money has been set aside to plow snow from the streets. Communities across the country are in a similar situation and have cut city employees work weeks down to four-days and have eliminated parks and senior centers. State officials are fearful if Hamtramck goes bankrupt, it will open the door for 30 other cities in Michigan to go down the same path, including Detroit. Hamtramck has been more dependent on the auto industry than even Detroit, and with the property values going down, the cities tax base is collapsing. 49;29 without a doubt can if you have failure of one large state New York, Michigan , California it could significantly drag down the whole economy The problem throughout most of the cities in the US is when money was rolling in , governments were very generous with benefits and pensions. but now the money has dried up and cities have legal obligations to pay up, or they will have to renegotiate contracts or file for bankruptcy.
Jim Sinclair's Commentary Class actions always settle before the miscreant has much to lose. Watch for a settlement that does not disclose squat. Regardless, the proceedings are now bullish for silver. Class action against Morgan, HSBC specifies silver manipulation mechanism Dear Friend of GATA and Gold (and Silver): A Chicago law firm yesterday announced another class-action lawsuit against J.P. Morgan Chase & Co. and HSBC Holdings PLC complaining of silver market manipulation. Interestingly, the lawsuit cites GATA's silver market manipulation whistleblower Andrew Maguire and U.S. Commodity Futures Trading Commission member Bart Chilton, and specifies mechanisms by which Morgan and HSBC could manipulate the silver market through the use of silver exchange-traded funds. The lawsuit complains: "Before the Class Period began, JPMorgan had become the custodian and an authorized participant of the largest known concentration of silver bars, the iShares Silver ETF, which holds in excess of 340 million troy ounces of silver, a sum that equals an estimated 1/3 of the total present global supply of silver bullion. As a result, it had actual knowledge of the precise whereabouts of much of the world's known silver bar supply. "In approximately March 2008, JP Morgan acquired Bear Stearns, which held a very large short position in silver. With more of the total short position in silver concentrated in the hands of JP Morgan, it had a further motive to suppress prices. "Upon information and belief, JP Morgan works together with HSBC, the other dominant player in the silver and precious metals markets. In July 2009, HSBC became the custodian of the SIVR ETF, which meant that it had physical access to and knowledge of the silver held by that trust. Notably, it named JP Morgan as one of the sub-custodians of the SIVR ETF.
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| Another Hole In The Bond Bubble As 30 Year Gets Reacquainted With Gravity Posted: 28 Dec 2010 06:09 AM PST
Following today's ugly 5 Year auction, and hot on the heels of the 180 degree EUR reversal from this morning, coupled with the renewed surge in gold and silver, the entire bond complex is again in free fall (and no, Build America Bonds has not and likely will not be renewed in its current form), lead by the 30 Year. And if this was based on an expectation of real rates rising, as the pundits would claim, which would be an expectation of economic improvement, then gold would not be flirting with its all time highs. Which means that today's market action in every asset class is representing the economy accurately, especially following the 4th consecutive home price drop be Case Shiller... every asset class except for stocks of course. Then again, with volume once again abysmal (MVOLNYE just under 1,400), HFT/Fed levitation programs are the only thing that is trading 100x P/E hot grenades as per always.
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| Trader Dan Comments On Soaring Commodity Prices and Plunging Bond Prices Posted: 28 Dec 2010 06:03 AM PST Dear Friends, Thanks to our diligent internet news sleuth, JB Slear, the following story is brought your way. Tie this story about the fall in US home prices together with what is happening in the commodity sector and the long bond to see where this is headed. Home prices are falling for one reason – lack of demand coupled with a growing supply due to the wave of foreclosure properties which are adding additional supply to the market. The market interpreted today's data release as evidence that the Fed's $600 billion + QE policy would not be ending anytime soon. That brought another surge of fund related buying into the commodity sector with the result that the CCI (Continuous Commodity Index) has now kissed its former all time high made back in the summer of 2008 long goodbye. It shot above 622 and appears to be accelerating, even at the end of the year when we would normally expect to see profit taking in the sector by longs who have profited immensely in 2010. I find it astonishing that fresh money is being committed to the sector as the calendar year winds down. This is highly unusual as this time of year is historically known as the time for book squaring. What it is telling us is that fund managers have no intention at this point of abandoning a strategy that has paid handsome dividends to them and will undoubtedly be looking to up their ante at the beginning of the New Year. Look for fresh highs early next year in the sector based on what is occurring in some of the various commodities. Sugar, after putting in a 30+ year high, has shot to yet another fresh high in today's session. Soybeans registered a 26 month high. Ditto for corn. Copper is now trading at $4.30 a pound! Crude oil continues to hold above $90. The bond market, after being fiddled with by the monetary authorities in the hopes of hoodwinking the public into believing that inflation pressures are subdued, promptly fell apart plunging a full point as participants are watching with great alarm the surge in the CCI. This combination, soaring commodity prices which are certain to erode consumer disposable income, and plunging bond prices which are a prelude to higher long term interest rates, are certain to make it even more difficult for would-be home buyers to enter a real estate market already being plagued by a lack of demand. Throw in a good dose of higher gasoline prices at the pump and it becomes all too obvious what we can look forward to in the coming year. I guess we have all been naughty over the past year because it appears that Santa Ben and his band of elves at the Fed have brought us all a gigantic lump of coal. Trader Dan Dollar Weakens for 4th Day as U.S. Home Prices Declined More Than Forecast The dollar weakened for a fourth consecutive day against the euro as U.S. home prices declined more than forecast, bolstering the case for the Federal Reserve to maintain its program of debt purchases. The dollar fell versus most of its 16 most-traded peers as the S&P/Case-Shiller Index of property values showed its first year-over-year drop since January. The franc rallied to a record against the U.S. currency amid optimism Switzerland's growth will encourage its central bank to raise rates. The Canadian dollar strengthened to parity with its U.S. counterpart for the first time since Nov. 11. "Housing is still obviously a concern," said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. "We're still seeing a slight push up in risk." The dollar dropped 0.4 percent to $1.3213 per euro at 9:08 a.m. in New York, after earlier touching $1.3275, the weakest level since Dec. 17. The U.S. currency declined as much as 1.2 percent to 81.82 yen, its lowest level since Nov. 12. The euro pared its gains against the dollar after the European Central Bank said it failed to fully neutralize the extra liquidity created by its bond purchases for a second time since the program began in May.
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| Using International Valuation Standards to Determine the S&P-500 Fundamental Value Posted: 28 Dec 2010 05:57 AM PST Of late, there has been a lively debate about the “fundamental” value of all sorts of things…stock markets, real estate, gold, oil, toxic assets, and even Treasuries. Often as mot the debate is a manifestation of a newly discovered psychological disorder called “Bubble-Phobia”, which is an irrational fear that prices are disconnected from the “fundamental”. As with the early psychological breakthroughs of Jung and Freud, for the S&P-500 there has been no shortage of theories, all the way from P/E ratios to Tobin’s “Q’s” and everything in-between.
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| Gold's Relatives: Mining Stocks Posted: 28 Dec 2010 05:57 AM PST Hard Assets Investor submits: By Brad Zigler In spite of the winter holidays, some people seem to be actually reading the investment blogs. Evidence of that came in the form of reactions to yesterday’s column on the relative strength of agribusiness stocks to agricultural futures. Complete Story »
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| Loonie hits parity with U.S. dollar Posted: 28 Dec 2010 05:55 AM PST December 28, 2010 (OttawaCitizen) — The Canadian dollar hit parity with the U.S. dollar on Tuesday. The loonie was trading at 100.10 US cents at 10:30 a.m. ET, but slipped to 99.87 cents US just before midday. Its last official close was 99.36 cents US on Christmas Eve. The Bank of Canada is closed until Wednesday, with Monday and Tuesday serving as holidays in lieu of Christmas and Boxing Day. With the loonie continuing to be traded on international markets, Tuesday was the first time the dollar has matched the U.S. dollar in value since Nov. 10, though it has generally traded at 95 cents US or more since September.
[source] RS View: Surely, in light of the laughably loose and lax U.S. fiscal and monetary policy, it's just a brief matter of time before people start referring to our U.S. Dollar as the Daffy… Gold, meanwhile, continues to be a very strong, sober, and upwardly mobile reference point in terms of all of the major monetary units of the world. With a look at these charts, can there be any doubt as to the one reserve asset best-suited to provide the foundation of the re-vamped international monetary system?
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| Simon Black's "Best Of 2010": Explains Why Planting "Mutiple Flags" Is Crucial For Our Insolvent Age Posted: 28 Dec 2010 05:46 AM PST
Simon Black, who for the past few months was frolicking in middle earth has reemerged again, this time from Buenos Aires, and shares a "Best of 2010" compilation with readers. " Date: December 28, 2010
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| Posted: 28 Dec 2010 05:44 AM PST By Captain Hook, Treasure Chests In reviewing the charts from the Chart Room over the weekend I came to the conclusion that in terms of timing the markets you don't want to think in terms of price right now, but in terms of time, where again, we are not looking for a blow-off top in the present intermediate move until sometime in the first quarter next year, with early February the favored target from both historical and cyclical perspectives. How did I come to this conclusion? Answer: As you will see in the charts below, several breakouts and trend blow-offs are in the process of tracing out, meaning more time is needed for this to occur no matter how overbought technical conditions in the market are at this time. And while it's true that everything from stocks to commodities are intermediate degree overbought, what this means is conditions will become even more overbought, and as a result, it's possible hyperinflationary conditions in the US could at a minimum be tested. So unfortunately you can never say never when it comes to hyperinflation with a corrupt and self-serving oligarch in charge of the money supply, where monetization practices are not included in conventional money supply measures, leaving the only way we will discover the condition our condition is in is by exploding prices. Of course when this happens people will tune in, which is happening in the bond market now, but will likely not be understood by meaningful percentages of the population until things that directly affect them, like food prices (watch Glenn Beck here), explode higher, which according to John Williams of Shadowstats.com should be anytime time now, ramping up aggressively into next year. So apparently it's time to stock up on rice and cans of tuna believe it or not, although it's our contention that if US Treasuries fall out of bed after a possible relief rally through light trading at Christmas, that while equities could see magnificent price explosions into the first quarter, that running into summer a similar outcome to that witnessed in the year 2000 will be witnessed, marking the popping of what we will dub the Fed's Quantitative Easing Bubble (QEB). And like all others before it this bubble will indeed be popped at some point, however again, timing is the question. If you were to simply look at stock market sentiment, which is at bearish extremes not seen for some 5-years, one could easily conclude such a popping should come sooner than later, meaning this year as opposed to next. Add on top of this the increasing fiscal uncertainty in Europe (and soon the US with it's popping bond bubble), continued consumer deleveraging, and any other problem of the day you wish to focus on, and a strong case can be made for an immediate popping of the Fed's QEB anytime now. Of course the thing one must remember is this is a suicide mission for these people, which includes the larger bureaucracy because their jobs depend on the oligarchs holding things together, so while the path may be volatile (like in 2000), don't be surprised if Da Boyz continue to jam things higher via an ever-expanding QEB until the bond market literally bursts, and stocks fall in unison with bonds in what would undoubtedly prove to be a sizable rout running into summer a la the 1940 model. That's what I see happening anyway, where monetization practices or not, eventually the combination of rapidly accelerating deficits (due to rising interest rates) and selling in the bond market officially pop that bubble, making all other considerations save deleveraging moot, at least for a brief moment in time. The question then would be whether we face true hyperinflation or a hyperinflationary depression like Japan's afterwards, or worse, because there is no plan B, possibly decades of feudal darkness once the economy's handlers lose control. And they will lose control at some point – they always do – it's Murphy's Law at work. That's what the divergence in the chart below is telling us, because through the ages people's reactions to bubble economics has not changed. The only thing that changes is the size of the bubbles, with the present bubble in bonds the biggest ever. This is of course why it will be defended at any cost, and why, albeit in more violent fashion, this divergence can get even more profound before something more permanent grips the macro. (See Figure 1) Figure 1 – Click Chart For Sharper Image
Source: The Chart Store When looking at the charts below that's the message we are getting, that the divergence above will grow more profound, believe it or not. How much more profound? Answer: About 200 NASDAQ points if the present bubble to is equal that of the one witnessed in 2007. And again, such a move, and more, is supported in the charts below. Let's take a look. First up we have the NASDAQ / Dow Ratio plot from the Chart Room, and as you can see below it's right on resistance before it breaks back up into bubble making territory. This of course is not suppose to happen within the same generation, that being another bubble in the NASDAQ the likes of which we witnessed in the year 2000, however at the same time, we still might get a taste between now and March next year if the dollar ($) starts falling again, which in my eyes would not be surprising record bearish sentiment amongst traders or not. (See Figure 2) Figure 2 – Click Chart For Sharper Image
Why would the $ fall next year, and as a result facilitate the building of even more profound bubbles than are being witnessed today? Answer: In one word the answer is history. To add the context don't forget just how corrupt and culpable Washington politicians are, and that despite rhetoric run in the media for appearance purposes, they will have the Fed debase the currency by any means, as it's doing with their present monetization practices evidenced in a continued generous POMO schedule. So again, while conventional money supply measures are not reflecting this largesse correctly, as James Turk points out all the numbers don't lie, where hyperinflation of the $ is in danger of breaking out increasingly profound hyperinflationary conditions. And we will undoubtedly get confirmation of such intentions from the Fed today at its last meeting of the year. Figure 3
As you can see above, the S&P 500 (SPX) / CBOE Volatility Index (VIX) is possibly set to break higher, where all we would need to see for an indication such a move was on is a breakout of RSI past sign resistance, accompanied by the MACD clearing Fibonacci related resistance. Then, if this measure of sentiment was able to clear indicated Fibonacci resistance at approximately 90, a double top might be in the cards, although nominal highs on the SPX would likely fall short of the 2007 double top high. Of course I could always be wrong about that if the $ is falling hard enough, where perhaps this becomes a reality too when Washington announces it will fund municipal deficits as well in order to avoid the muni-bond disaster many are expecting. If this were to occur, then stocks could possibly go off the scale, as is the case with the Fibonacci resonance related projection for the NASDAQ / VXN Ratio shown below, projecting all the way up to 250. (See Figure 4) Figure 4
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 Tuesday, December 14th, 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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| More Risk Appetite for Fiscal Gluttons Posted: 28 Dec 2010 05:24 AM PST This week, between Christmas and New Years, is always slow. Traders have mostly taken the week off. The Dow was down a little yesterday. Gold was up a little. Nothing to get excited about. Here's a guy who should have taken off too. Bloomberg reports: "QE2 has had unforeseen benefits in raising risk appetites and improving confidence across the board," said Mark MacQueen, a partner at Austin, Texas-based Sage Advisory Services, which oversees $9.5 billion. What? Unforeseen benefits? Those are exactly the flimflam benefits the Fed promised. Put more money in the system; hope it causes "animal spirits" to pick up. How do increased "risk appetites" really help anything? The US economy gorged itself on risk during the bubble years. The Fed should be helping it stay on a diet; not waving chocolate éclairs in front of the slob's nose. But we're already beginning to apply our New Year's Resolution for 2011. We're going to improve ourself. We're not going to be so critical. Yeah…more risk appetite. Sure. Why not? Just what we need, right? We need speculators to make bigger bets. We need homeowners to take chances again – buy a new house…flip one or two of them… Who knows; maybe they'll go up. And we need consumers to buy things they don't need with money they don't have. Yeah…that's just what we need – more credit-fueled risk-taking. Thanks for bringing that to our attention, Mr. MacQueen. Bill Bonner More Risk Appetite for Fiscal Gluttons originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
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| “The double dip in home prices which started in June, is persisting.” Posted: 28 Dec 2010 05:23 AM PST Case Shiller Misses Consensus As Home Price Decline Continues For 4th Month MK: This means another wave of QE's – greater expansion of the Fed's balance sheet to 20, 25, 30 trillion dollars of worthless mortgage paper swapped for t-bills. This means more buying pressure for PM's. The US dollar is hanging on by an [...]
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| This past week in gold - Dec 27, 2010 Posted: 28 Dec 2010 05:22 AM PST Jack Chan JACK CHAN's Simply Profits. Precision sector timing for gold, energy, and technology. GLD – on sell signal. *** SLV – on buy signal. *** GDX – on sell signal. *** XGD.TO – on sell signal. Summary Long term – on major buy signal. Short term – on mixed signals. We continue to hold our core positions with a hedge in place to lock in profits until the next cycle bottom. ### Disclosure We do not offer predictions or forecasts for the markets. What you see here is our simple trading model which provides us the signals and set ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We...
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| Gold & Uranium: Rules Of The Range Posted: 28 Dec 2010 05:21 AM PST Stewart Thomson email: [EMAIL="stewart@gracelandupdates.com"]stewart@gracelandupdates.com[/EMAIL] email: [EMAIL="stewart@gracelandjuniors.com"]stewart@gracelandjuniors.com[/EMAIL] Dec 28, 2010 1. Golden Crystal. Whether you buy breakouts (difficult) or price weakness (best), it is important to keep your charts simple and clear. Here's the Gold Bullion Chart at around 3am this morning. 2. Notice the focus on the "here and now", which is the $1370 to $1390 price range. The actual range is more like 1372 to 1392, but it is important to always focus on your failure to analyse, rather than your ability to analyse. 3. Markets rarely do exactly what analysts predict, and the banksters have the very best technical analysts and computer models, so it is very easy for them to create an apparent upside chart breakout or a sell signal, and then quickly send price in the other direction. 4. Your only defence is to be very loose in your views of the importa...
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| The Mercenary Geologist’s Gold Review: Q4 2010 Posted: 28 Dec 2010 05:17 AM PST A Monday Morning Musing from Mickey the Mercenary Geologist [EMAIL="Contact@MercenaryGeologist.com"]Contact@MercenaryGeologist.com[/EMAIL] December 27, 2010 This is the last in a year-end series updating the companies I cover by commodity sector. My previous comprehensive review of these companies was sent to subscribers on July 23 (Mercenary Musing, July 26, 2010) and this musing will use that report date as reference. Today we briefly review the gold market in the second half of 2010 and provide detailed updates on four gold companies: Amarillo Gold Corp (AGC.V), Animas Resources (ANI.V) Ltd, Goldgroup Mining Inc (GGA.T), and Otis Gold Corp (OOO.V). I am a shareholder of each and Amarillo, Goldgroup, and Otis are sponsors of my website. Over the past five months gold has turned in one of its best performances since the nine year bull market began in mid 2001. From a low of $1162 on July 27, gold has been on quite a run and reached an all time high of $1424 on Decem...
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| We Will Have an Upside Explosion in Gold: Richard Russell Posted: 28 Dec 2010 05:08 AM PST "Ted Butler tells CFTC Commissioner Bart Chilton not to bring a knife to a gunfight. GLD ETF has a 117,000 ounce withdrawal. Demanding the Mark Back: Opposition to the Euro Grows in Germany. GATA's lawsuit for Fed's gold documents slogs on. " GOLD AND SILVER: A 2-Day Report Not much happened on December 24th... which should be no surprise to anyone. But that can't be said of the 23rd. What happened on that day was right out of JPMorgan's playbook. Engineer a sell-off in both gold and silver... then cover/go long like mad themselves... even though volume was very skinny in both metals. It's obvious that they're leaving no stone [no matter how small] unturned in their quest to cover their short position in silver. Gold appears to be just a sideshow for them. It's already obvious that they're heading for the exits in silver... but they don't want to appear even more conspicuous about it than they already are, by just going after silver all by itself. Y...
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| Testy Tuesday – Topping or Popping? Posted: 28 Dec 2010 05:07 AM PST
Testy Tuesday – Topping or Popping?Copper hit a new all-time high in Shanghai this morning (as the guy who owns 90% of London’s closed for the holiday exchange supplies sold it to himself for more money than he did yesterday) and gold is back at $1,400 in the futures and that should give us a better entry on FCX puts than we expected for round 2 but Paul Krugman has me worried now that maybe commodity prices are just high because the World hasn’t got enough of them to go around. I think Paul may be discounting the effect of a 10% decline in the dollar a little too much – which is understandable as he is still arguing for more stimulus while I’m arguing that the way they are stimulating now is causing this problem and can not and should not be sustained. Still, we have to be pragmatic. That’s why, this weekend, I posted our "Secret Santa Inflation Hedges for 2011" as a follow-on to the "Breakout Defense – 5,000% in 5 Trades or Less" ideas of the 11th and, in the week between the two, we had bullish bets on HMY, XLF, CAKE, TNA, IWM, CCJ, CHK, EXC, TNA, XLF, UNG, GLD, AAPL, GLW, TOT and AXP – which I had mentioned on the 19th in the weekend post "It’s Never too Early to Predict the Future." Just because I think there’s going to be a disaster doesn’t mean we can’t go with the flow while we wait, right? We don’t have to like the market to buy it above our breakout lines but we do need to keep in mind that this is a very thin rally that is very likely nothing but window dressing aimed at dragging money off the sidelines so the IBanks who have been propping up the markets can, once again, stick the retail shareholders with the bag as they load up on puts (watch the VIX to confirm) and crash the markets once again. I’ve seen it happen in 1999, I saw it happen in 2008 and, both times, the rally lasted longer than seemed logical but the smart play was to hit and run – not to leave your money on the table but to participate in the upswings and then get out. Yesterday, for example, we grabbed the QQQQ Weekly $53 calls at $1.38 in the morning and ditched them at $1.85 in the afternoon. That’s 35% on a day trade and made a nice cover for our bearish bets so we didn’t get forced out of them on the pop. Today we will do the same because these low-volume rallies don’t impress us, even if they have gotten Paul Krugman to capitulate on commodities! Our breakout levels give us very clear indicators as to where to kill the bullish side of our bets. As our aggressive, 5,000% suggestions are complex spreads – timing is everything. Those were for Members only and still in progress but back on Dec 3rd, I had put a couple of similar ideas right in the morning post. One was the FAS April $20/25 bull call spread at $2.70, selling the Apr $21 puts for $2.55 for a net .15 entry on the $5 spread. The $20/25 spread is already $3.50 and the Apr $21 puts have fallen to $1.23 for a nice net $2.27 on the spread, up 1,433% on cash in less than a month. Figure margin on the $21 puts to be $10.50 plus the .15 cash and it’s still a nice 21% ROI in less than 30 days – THAT’s the way to fight inflation! The max gain on this trade is $4.85 so still a lot of cash to capture and we are feeling good about XLF (it was my "guaranteed" trade of the year in the Secret Santa post), which means we are not inclined to kill the trade at less than 50% of potential but that doesn’t mean we don’t set a stop on the net at about $2 to lock in the gains. The other trade idea from the post on the 3rd was for DBC. There were a couple of ideas here – the first was simply buying the April $27 calls for $1. Nothing fancy there, just buy a call and wait for inflation to kick in. Those calls are $1.30 and were $1.35 Friday so $1.25 stop locks in a 25% gain – also not a bad month for most people’s portfolios, right? The spread play was the Jan 2012 $26/30 bull call spread at $1.40 and you can just take that by itself as well as it has a potential 185% upside – enough to keep you ahead of the game. That spread is still playable at just $1.55 (up 11%) while the $22 puts we looked at selling for $1.10 to make it a net .30 trade are now .75 and up .35 (32%) so that’s net .80 on that .30 cash commitment on that trade or 266% cash back in less than 30 days.
We are still trying to stay on top of things with our $10K to $50K Portfolio but we are stuck dead at $26,000 (virtual net) with 4 bearish positions remaining open. Our deadline for $50K was Jan 21st and it’s not looking good at the moment as this market simply goes up and up every day but I still have the nagging feeling that, the minute we capitulate, we’ll miss a beeline to $50K so it looks like we’ll stick it out over the weekend, although it’s only Tuesday so it may be too early to put on a brave face on bearish bets that clearly are not working at the moment. It does seem to me that what’s going on with copper is a microcosm for what’s going on in the markets. The trading is very thin, the Chinese markets are selling off with the Shanghai down another 1.7% this morning and the Hang Seng off 1% as well. Nonetheless, with London closed and no real price check on the market, copper shot up a nickel to touch $4.31 overnight as the Dollar was knocked down from 80.7 to 78.9 – which used to be considered a major move in a currency but is now considered "Tuesday morning." It is truly amazing what you can get used to… Somali Pirates (aka "Rent-A-Rebel") have seized an fuel tanker, also aiming to drive up oil prices during a thinly traded week (are you seeing a theme here?). Already the return of $3 gas prices has knocked 20% off the value of used SUVs in just one month, but I sure don’t feel sorry for the people who still have them – I was dumbfounded at how many SUVs were selling this year as truly my 6 month-old niece has more of an attention span than the American consumer, who can be burned over and over and over again by the same bad decisions, it seems. "It’s a challenge," says Adam Lee, president of the family-run Lee Auto Malls dealerships in Maine. "How do you tell a good customer, ‘You paid $32,000, and now it’s only worth $17,000?’" ROFL!!! Of course, I guess you could say the same about "good customers" who keep buying CMG, NFLX, AMZN and PCLN, who expect a good ride but will much more likely end up in a horrible crash. At $120, we can add FCX to our list of favorites as I don’t see them holding the dollar below 80 once Europe rolls into the New Year and is forced to deal with their issues again. Getting back to retail shoppers – MasterCard’s SpendingPulse survey shows a 5.5% increase in retail spending for the 50 days before Christmas this year. Total Retail Sales were $584.3Bn, now beating 2007&rime;s record $566.3Bn after a 6% dip in 2008 and a 4% bounce last year. These are blow-out numbers led by top 10% favorites like clothing (up 11.2%), Jewelry (up 8.4%) and Luxury Goods (up 6.7%) and even home furniture put in a positive month for the first time since August. “For the past year or two, when I’ve seen growth in one area, it seems to come at the expense of another,” said Michael McNamara, vice president for research and analysis at SpendingPulse. “Here, things are actually all moving in the right direction.” Of course, the broad increase was driven in part by higher spending on necessities like gas and food. And even with the across-the-board gains, some categories, like furniture and electronics, have still not climbed back to their prerecession levels. “In the face of 10 percent unemployment and persistent housing woes, the American consumer has single-handedly picked himself off the mat, brushed his troubles off and strapped the U.S. economy on his back,” Craig R. Johnson, the president of the consulting firm Customer Growth Partners, wrote in an e-mail. I like SKS ($10.92) as the laggard in that space. You can buy the stock and sell the 2013 $10 puts and calls for $4.65 for a net $6.27 entry and, if below $10 and another round is put to you, the average entry is $8.14, a nice 25% discount off the current price (see "How to Buy Stocks for a 15-20% Discount" for details on this strategy, which is one of our favorites). The ICSC Retail Store Sales were not so bullish, up just 1% but the Redbook Chain Store Sales had a very strong 4.6% gain over last year which simply indicates that sales are moving out of the retail stores and onto the Web at a very rapid clip. That’s right – even more unemployment as Big Box retailers are able to sell more stuff and use less people! Of course, we don’t know if anyone is actually making profits on all these sales but we’re not going to bet against it at this point – clearly the tide is turning bullish on the data front. I still fail to see where the money is coming from. I mentioned to Members yesterday that perhaps the deleveraged consumers are simply re-leveraging for the holidays and we’ll be right back to tightness in January as people are stunned by their MasterCard bills – especially if it’s combined with rising grocery prices and $50 tanks of gas again. Home prices continue to fall off a cliff as Case-Shiller tells us we fell another 0.8% in October after falling 0.7% in September and this was NOTHING like the +0.1% expected by analysts who aren’t paying attention to reality. Keep in mind we’re doing all this with record low interest rates. What happens if our TBTs (as I said yesterday, a buy at $37.50) head back over $40 in January and those credit-card interest rates start climbing on unpaid balances? The average US household has $8,000 in credit card debt and that number peaks out over $10,000 in January. Of course, why should consumers restrain themselves when the government grew their debt 22.7% last year – adding a $25,299 debt burden on every single citizen? If the government is going to drop $100,000 worth of debt on my family this year – the least I can do is get myself a new TV, right? I am TRYING, really I am, to get more bullish. So far, it’s a slow process but, if we break out to new highs today and hold them – what else can we do but go with the flow? For a 20% discount for all PSW newsletter services, click here
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| Posted: 28 Dec 2010 05:02 AM PST
Anyone who regularly follows me knows that I have been adamant in disagreeing with any who actually assert that the US has entered a housing recovery. The bubble was blown too wide, supply is too rampant, with demand too soft and credit tighter than frog ass. Today, the Case Shiller numbers have come out, and after a few months of showing price increases, have come around full tilt to reveal the truth – Reggie Middleton style! From CNBC: U.S. single-family home prices fell for a fourth straight month in October pressured by a supply glut, home foreclosures and high unemployment, data from a closely watched survey showed Tuesday. AP The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas declined 1.0 percent in October from September on a seasonally adjusted basis, a much steeper drop than the 0.6 percent fall expected by economists. The decline built on a revised decrease of 1.0 percent in September and took prices down 0.8 percent from year-ago levels. It was the first year-on-year drop in the index since January. The housing market has been struggling since home buyer tax credits expired earlier this year. To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. “The (housing) double dip is almost here [there was no double dip, just a result of .GOV bubble blowing] , as six cities set new lows for the period since 2006 peaks. There is no good news in October’s report,” said David Blitzer, chairman of the index committee at S&P. Eighteen of the 20 cities showed weaker year-on-year readings in October and all 20 cities showed monthly price declines. Unadjusted for seasonal impact [in other words, closer to the truth], the 20-city index fell 1.3 percent in October after a 0.8 percent decline in September. To begin with, the Case Shiller index is highly flawed in tracking true price movement in a downturn such as this since said downturn is being led mostly by elements that the CS index purposefully omits. This means that those price drops that are being shown by the Case Shiller index are actually highly optimistic and seen through spit shined rose-colored glasses. The reality is a tad bit uglier. See ??The Truth Goes Viral, Pt 1: Housing Prices, Economic Sales and the State of Depression as well as Why the Case Shiller Index, Although Showing Another Downturn Coming, is Overly Optimistic and Quite Misleading! I discussed my thoughts on the Case Shiller index (a complex statistical construct that excludes many of the factors currently dragging on the housing market) being quoted in the mainstream media as if it was the S&P 500, its shortcomings, the true state of housing sales value in America and what’s in store for the near future.
Subscribers have access to all of the data and analysis used to create these charts, in addition to a more granular application, by state in the SCAP template and by region in housing price and charge off templates – see
See the following posts for an extensive background on the topics discussed in the video:
Several times last year I stated that most of the big banks were being much too optimistic in their forecasts and releasing of credit loss provisions – see As Earnings Season is Here, I Reiterate My Warning That Big Banks Will Pay for Optimism Driven Reduction of Reserves. You see, the mortgages currently on the books are worth even less as the collateral continues to depreciate, and it is exacerbated by the robo-signing problems. …despite a decline in net revenue and increase in non-interest expenses (both of which appear to be part of an obvious trend), profit before taxes was up 22% y/y as provisions for credit losses were slashed by 60%. JPM decreased its provision for credit losses despite no evidence of a substantial, sustainable improvement in credit metrics (please reference As Earnings Season is Here, I Reiterate My Warning That Big Banks Will Pay for Optimism Driven Reduction of Reserves). Provisions have lagged charge-offs for two consecutive quarters in a row. Click to enlarge
As a result, banks allowances for loan losses have decreased to 4.9% in Q3 from 5.1% in Q2 and 4.7% in previous year. Although under provisioning has helped the bank to mask its dearth in profits it has also materially undermined its ability to absorb losses if economic conditions worsen. The Eyles test, a measure of banks ability to absorb losses, has consequently worsened to 1.9% in Q3 from 3.7% in Q2 and 5.9% in Q3 09.
I used JP Morgan as an example, but they were far from alone. As excerpted from Four Facts That BANG JP Morgan That You Just Won’t Hear From The Sell Side!!! FACT THREE: The JP Morgan Foreclosure Pipeline is Not Only Packed Tight, It Is Progressively Getting Much Worse As The Time To Foreclosure Extends AND the Delinquency Rate Continues to Climb At The Same Time That Real Economic Housing Sales Value Is At An All Time Low As Well – and Getting Worse!!!Future Losses Are Mounting at an Incredible Pace Yet JPM is reducing provisions due to improving credit metrics. See JP Morgan’s 3rd Quarter Earnigns Analysis and a Chronological Reminder of Just How Wrong Brand Name Banks, Analysts, CEOs & Pundits Can Be When They Say XYZ Bank Can Never Go Out of Business!!! and JP Morgan’s Analysts Agree with BoomBustBlog Research on the State of JPM (a Year Too Late) but Contradict CEO Jamie Dimon’s Conference Call StatementsJP Morgan’s average delinquency at foreclosure is 448 days (with Florida and New York having a record 678 days and 792 days of delinquency at foreclosure). Average delinquency for the industry is about 478 days and is increasing consistently since the start of the crisis. During 2009 the average days from delinquent to foreclosure process was 223 days while as of August 2010 average days from delinquent to foreclosure process is 478 days. A very important, yet often under appreciated fact is that although serious delinquencies are still climbing, the lengthening of foreclosure process has resulted in these loans still being classified as delinquent. The difference between delinquency rates and foreclosure rates has increased to 5.3% (9.8% delinquency rate vs 4.6% foreclosure rate) in August 2010 from 3.6% in March 2002 (5.1% delinquency rate vs 1.5% foreclosure rate). As the difference between delinquencies and foreclosure rates normalizes, and shadow inventory overhang moves to further depress real estate prices, real estate related write-downs could further balloon. So, you see, the marginal improvements in credit metrics that JP Morgan’s management has used to justify the releasing of provisions (which also just so happened to have padded a weak quarter of accounting earnings) is really kicking the can of reckoning down the road…
Add to this the difficulty in getting rid of the properties once they are foreclosed upon and you will find that the big banks such as JP Morgan (or after looking at these numbers, particularly JPM (although I suspect BAC and certain others are worse off) will become the nations largest distressed residential housing REITs!!!
For those who didn’t catch it, I espoused my opinions of JP Morgan’s overt optimism on CNBC a couple of months ago, and things are turning out exactly as have stated with bank reserves being shoved into the accounting profit bucket just as the foreclosure pipeline is being backed up by robo-signing scandals which exacerbates the largely under appreciated shadow inventory problem (The 3rd Quarter in Review, and More Importantly How the Shadow Inventory System in the US is Disguising the Equivalent of a Dozen Ambac Bankruptcies!), MBS investors are demanding significantly increased put backs (see The Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!) and “Yes, Housing Prices Have Much Farther to Fall. We’re Talking Years…” For those who haven’t seen it yet, here is my interview on CNBC discussing JP Morgan’s optimistic management and Apple’s margins with Herb Greenberg. Related links:
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| The Year of Living Quantitatively Posted: 28 Dec 2010 04:54 AM PST There are increasingly those who predict hyperinflation, which is popularly defined as rapidly-rising prices that soon reach un-payable levels, and which is always caused by the true definition of inflation, which is (according to the Mogambo Big Book Of Economic Stuff (MBBOES), "A gigantic growth in the money supply, which is caused by banks deliberately acting like greedy, lying, filthy pigs who deserve to be thrown in jail." I am, as you probably guessed, one of those people, although I seem to be the only one who is literally screaming his guts out in fear about the inflation in prices caused by the Federal Reserve creating so much money, and who is, again literally, puking his guts out in fear that the Federal Reserve is in the beginning stage of a long period of massive growth in the money supply, starting with the $1.2 trillion that will be created by quantitative easing 2 this year. This year! In One Freaking Year (OFY)! $1.2 trillion of new money in One Freaking Year (OFY)! It boggles the mind! Well, this barfing thing has elicited two responses, one of which is my wife saying, "I'm not cleaning that up!" followed by her saying, "Clean that up!" followed by, "This is the last time I am telling you to clean that up or there will be no fried foods in this house for an entire month!" followed by her saying, "Thanks for cleaning that up, moron!" The other response is that I am happy to report that cleaning up Mogambo Vomit Of Fear (MVOF) has a decidedly calming effect on people who are screaming in outrage and fear at the slimy treachery of the Federal Reserve creating so much money, and which is indeed fortunate for me, as it allowed me to calmly read Victor Sperandeo writing in this week's Barron's, that "in periods of hyperinflations, gold tends to appreciate by 2,000% to 50,000% against a hyperinflated currency." Wow! As for a hyperinflated currency, the monetary base jumped a mighty $53 billion last week to $2.03 trillion, which is a hefty 2.7% jump in One Freaking Week (OFW)! And much more to come! And so, if I read my Sperandeo correctly, gold at $1,400 an ounce will "tend" to go up in price by 20 times to 500 times, taking gold to somewhere between $28,000 an ounce and $700,000 an ounce? Whee! Maybe this increase in the money supply, which always leads to inflation in prices, is why bonds are dropping in price, too. And how much bond investment money has been "lost"? According to the WSJ a week or so ago, the 10-year notes have dropped 5.5%, and "the price of the 30-year bond, which is more sensitive to changes in yield because of its longer duration, has fallen by more than 7%," which was bad enough then, and is worse now. So, with $14 trillion in national debt, an average decline in value of only 6% would mean a paper loss of $840 billion? Wow! When you imagine these kinds of losses appearing on tax returns, you understand the frantic desperation of the government and the Federal Reserve to keep things up until the end of the tax/calendar year! Peter Schiff of Euro Pacific Capital does not want to comment on taxes, the motives of the government, any of my paranoid conspiracy theories, the way my darling blue eyes twinkle with a light of their own, or even the horrific losses accruing to those stupid enough to own bonds at such ridiculously overvalued prices. Rather, he implies that it's going to get A Lot Worse From Here (ALWFH), because, "If bond prices failed to rise given such a Herculean effort to lift them up, there can be only one direction for them to go: down." And rightfully so, too! Inflation in prices is everywhere! And the rate of inflation in prices swamps the puny yields from overpriced bonds! For instance, the CRB index is up 13.1% year-to-date, and the Goldman Sachs Commodities Index (GSCI) is up 16.5%, too! And The Economist magazine shows the commodity-price dollar index for "all items" to be a whopping 30.6% year-over-year change! Food, for crying out loud, is up 24.9% in the selfsame last year! You can probably tell by the way I am in Mogambo Panic Mode (MPM) that these are nightmarish levels of inflation, and they are going to get worse, as in "more nightmarish," because Agora Financials' 5- Minute Forecast writes that because the price of oil is rising, and I assume will continue to rise with the presumed fall in the purchasing power of the dollar due to the foul Federal Reserve creating so many of them, "It's been said that every $1 added to the price of a barrel of oil is $100 billion subtracted from GDP." This dismal fact is borne out by FedEx just announcing that it will cost 3.9% more to ship something via FedEx, probably as the result of its profits calling by "18% in the third quarter" and that its "fuel costs were 26% higher than Q3 2009." United Parcel Service is raising its rates 4.9%, too. And there is more than the faint scent (sniff, sniff) of inflation in how The 5 went on, "Wholesale prices jumped 0.8% during November, according to the Labor Department. That's the fifth straight monthly rise. The increases were concentrated in energy (up 2.1% for the month) and food (up 1%)." For the month! These are inflationary increases for the month! At this point I caution you to calm down instead of completely freaking out and going to Washington, DC, vowing to throw out the inflationary idiots in Congress and burn the inflationary Federal Reserve to the ground. Instead, it is much easier to just buy gold, silver and oil to capitalize on the inflation in prices that all this new money from the Fed will cause. And trust me; there will be plenty of people ahead of you in wreaking revenge against the government, the Federal Reserve, and the scumbags who encouraged them when they realize, as H. L. Mencken once famously said, that we got "the government we deserve, good and hard." And while these rioting mobs angrily "take out the trash," you will be busy calculating how rich you are after buying gold, silver and oil at these low, low prices, and happily muttering to yourself, "Whee! That investing stuff was easy!" The Mogambo Guru The Year of Living Quantitatively 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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| Posted: 28 Dec 2010 04:54 AM PST SPECIAL REPORT December 28, 2010 "The 7 modern sins: politics without principles, pleasures without conscience, wealth without work, knowledge without character, industry without morality, science without humanity, worship without sacrifice." --- Canon Frederick Donaldson I have been watching recent developments around the world with considerable interest. There are renewed riots in Greece, new demonstrations in Italy, a growing divide between citizens and government in Ireland while tensions in Spain and Portugal increase daily. Also there are new developments in Belgium, Hungary and Poland as the debt disease spreads its own deadly version of the famous "green shuts" that have yet to materialize in the United States. When the debt crisis first broke out, and that's what it is, a debt crisis, people generally didn't pay much attention to it. They assumed that it would be "handled" just like the Mexican, Asian, Russian and 9/11 crises that came before. That's...
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| The Impossibility of a Gold Bubble Posted: 28 Dec 2010 04:53 AM PST By Jeff Nielson, Bullion Bulls Canada In an ocean of propaganda, there are few forms of disinformation as annoying as the endless "gold bubble" babble. Typically, precious metals commentators will refute such nonsense by pointing out that compared to other commodity prices today, and compared to the gold price itself in 1980 that gold is still unequivocally "cheap" – and certainly does not represent an asset bubble in any respect. Despite the quintupling of the price of gold off of its absolute bottom, gold is arguably just as "cheap" today as it was when the price was below $300/oz. The reason is simple: the fiat paper currencies in which the price of gold must be expressed have been debauched/diluted by Western central banks (and the governments they represent) just as fast as the price of gold has been able to rise. Indeed, more worrisome is the fact that all Western governments look vulnerable to debt-default in their futures, with that fate all but inevitable for several European governments and (of course) the United States. Even worse than that, however, is that all of the actions of these governments make it abundantly clear that they are prepared to embrace hyperinflation (and a de facto default through driving their currencies to zero) rather than formally defaulting – and imposing the "hit" on bond-holders which is the only path to solvency for several of these nations. As the probability of default-through-hyperinflation moves from being likely to near-certain, this directly implies a corollary in the precious metals market: that it is impossible for gold to become an asset bubble. There is nothing either radical or surprising in such a conclusion. In fact, I have already implied this in a previous two-part series on precious metals and hyperinflation. It is a matter of simple arithmetic that as currencies go to zero, the price of hard assets go (literally) to infinity – with gold and silver being at the top of the list of "hard assets". This is the same thing as saying that gold (and silver) won't be "fairly valued" until the price reaches "infinity". And since (by definition) any finite number we are capable of expressing is less than infinity, it is mathematically impossible for the price of gold to ever reach a level where gold would represent an asset bubble. The only development which could negate this trend is if Western governments, and especially the U.S. (whose dollar is still the world's "reserve currency") were able to put an end to their spiraling debts and spiraling money-printing. In terms of the economic fundamentals of these nations, I have already been crystal-clear in previous commentaries as to the only policies which can restore these economies to a solvent basis (even after a debt-default): a four-day work week to put an end to massive, structural unemployment; and a taxation overhaul which disgorges the $10's of trillions in idle wealth being hoarded by 21st century Western misers. Without moving to a four-day work week, no Western economy can possibly have enough taxpayers to support even a minimal level of government. Again, this is just simple arithmetic. With more old people to support (by a vast margin) than at any time in our societies' histories, we can't expect to pay out the vast entitlements that pampered baby-boomers expect with far fewer taxpayers than at any time in history. Similarly, our economies are certainly doomed to implode if the despicable "hollowing-out" of our wealth (from income taxation) is not reversed. It is a matter of unequivocal arithmetic that all income taxation systems suck all the wealth out of the pockets of the poor and middle-class, and deposit that wealth into the hoards of the ultra-rich misers. It is also one of the most fundamental principles of economics that economic health is a direct function of the "velocity of money" in our economies. In other words, in any/every capitalist economy, our credit-based "growth" is only sustainable if money is vigorously spent and re-spent as it moves from one hand to the next. More articles from Bullion Bulls Canada….
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| Featured Coin News and Articles for December 19-25, 2010 Posted: 28 Dec 2010 04:52 AM PST What's New This Week……… Spectrum Group International, Inc. (SPGZ.PK) announced today that its subsidiary Bowers and Merena Auctions, one of the world's pre-eminent auctioneers of rare coins and currency, has entered into an agreement with Stack's, the oldest rare coin retail and auction company in the U.S., to combine their operations. In his weekly column, Greg Reynolds discusses topics that include the FUN auctions and the Henry Miller collection. Odyssey Marine Exploration, Inc. (NasdaqCM: OMEX) a pioneer in the field of deep ocean exploration, was named in several U.S. State Department cables obtained by WikiLeaks and furnished to the media worldwide.
Bowers and Merena, one of the world's preeminent auctioneers for rare coins and currency, will conduct the January Rarities Sale as its first event of 2011. The single-session sale on Jan. 4 at the Grand Hyatt Tampa Bay will offer nearly 1,700 lots of rare and desirable United State and Colonial-era coinage. Coin profile on the unique 1834 original half dollar. "Only a few proof 1834 half dollars are known, mostly restrikes from the dies used to produce the Crushed Lettered Edge coins." Two rare early proof sets and a remarkable set of six pattern coins associated with the famous "Stella" coinage experiment are important collective highlights of Heritage's Tampa FUN Platinum Night U.S. Coin Auction, Thursday, Jan. 6, 2011. Doug Winter writes: The presence of a number of important Type Three Proof Liberty Head double eagles in the upcoming 2011 FUN auction got me to thinking about . What are these coins, why are they important and do they deserve the market premiums they enjoy?
Ponterio & Associates, a division of Bowers and Merena Auctions, is pleased to present the January 2011 N.Y.I.N.C. Auction at the Waldorf Astoria in New York on Jan. 7-8. The auction will feature 2,558 lots including Part I of the Len Novotny Collection of Mexican Coinage, the Michael Demling Collection of Ancient Coinage, David Ian Wright Collection of Italian Banknotes and a superb selection of Fussli specimens. The world-famous Medallic Art Company announced today a new web site, www.medallic.com , designed to better display its 100+ years of minting excellence and to provide ready access for customers and art historians to numerous product categories, galleries, and historic slide presentations and custom minting information. NGC has certified a very interesting group of Saint-Gaudens Double Eagles that have remained in the possession of a family since prior to World War II. When purchased in Europe last month, their unusual history was revealed to the buyer. NEW & UPDATED – Our coverage of rare coin and currency news has expanded with Austin Purvis taking over as Editor of Coin News Daily. This is a special section of CoinLink where we scour the web for items of interest related to numismatics and post a short excerpt and link to these "off site" resources. We have also made changes to The Bullion Report with daily news and article updates, and a monthly analysis of the "Premiums Over Spot" for Gold and Silver Bullion products. View all the latest rare coin news here
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| Posted: 28 Dec 2010 04:52 AM PST The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio! December 28, 2010 08:50 AM watch [url]http://www.grandich.com/[/url] grandich.com...
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| The Fed's Monetary Policy is About to Run Into a BRIC Wall Posted: 28 Dec 2010 04:49 AM PST
Over the last few months I’ve noted repeatedly that THE key issue for the financial markets is the ongoing tension building between the Fed’s pro-inflation policy and China’s anti-inflation policy.
That tension just kicked it up a notch.
Over the weekend China hiked interest rates 0.25%. This was the second interest rate hike in three months (the first was on October 19, 2010). And it sends a clear message that China is taking action to cool its monetary system after consumer prices rose 5.1% in November.
China’s not the only one. Both Russia and Brazil have recently entered into the “anti-inflation fray” as the below stories attest:
Russia, worried by inflation, hikes deposit rates
Russia's central bank raised interest rates on its deposit operations on Friday to contain surging inflation, its first step away from the loose policy implemented after the financial crisis hammered the Russian economy.
The bank lifted its deposit rates by 25 basis points but left the cost of lending operations -- including the benchmark refinancing rate -- unchanged, saying a narrower corridor between the cost of various instruments would increase the effectiveness of its interest rate policy.
Brazil Bank Signals Rate Rise Is Near
Brazil's central bank caught markets somewhat by surprise Wednesday with an unusually clear commitment to raise interest rates soon, as the outlook for inflation has become "far less favorable" than it had previously thought.
Brazil joins other emerging countries, including China, that are taking steps to cool their economies, for fear of overheating. Earlier this month, China said it will shift to a "prudent" monetary policy next year, amid growing concern in Beijing about inflation and excessive liquidity fueled partly by loose monetary policies in other countries.
In plain terms, our esteemed Fed Chairman Ben Bernanke is about to find his policies running face first into a BRIC wall. He’s been exporting inflation abroad to the emerging markets all the while claiming it doesn’t exist. With growing civil unrest due to soaring food and energy prices the emerging markets are now fighting back. On that note, China and Russia have already cut their US Treasury holdings by 3% and 9% respectively year over year.
These may not seem like a HUGE drop, but when you consider that both countries are aggressively loading up on Gold and other natural resources at the same time, and we may be at the beginning of a potential seismic shift away from US debt for foreign central banks.
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).
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| Class action against Morgan, HSBC specifies silver manipulation mechanism Posted: 28 Dec 2010 04:49 AM PST 1:30a Tuesday, December 28, 2010 Dear Friend of GATA and Gold (and Silver): A Chicago law firm yesterday announced another class-action lawsuit against J.P. Morgan Chase & Co. and HSBC Holdings PLC complaining of silver market manipulation. Interestingly, the lawsuit cites GATA's silver market manipulation whistleblower Andrew Maguire and U.S. Commodity Futures Trading Commission member Bart Chilton, and specifies mechanisms by which Morgan and HSBC could manipulate the silver market through the use of silver exchange-traded funds. The lawsuit complains: "Before the Class Period began, JPMorgan had become the custodian and an authorized participant of the largest known concentration of silver bars, the iShares Silver ETF, which holds in excess of 340 million troy ounces of silver, a sum that equals an estimated 1/3 of the total present global supply of silver bullion. As a result, it had actual knowledge of the precise whereabouts of much of the world's known silver bar supply. "In approximately March 2008, JP Morgan acquired Bear Stearns, which held a very large short position in silver. With more of the total short position in silver concentrated in the hands of JP Morgan, it had a further motive to suppress prices. "Upon information and belief, JP Morgan works together with HSBC, the other dominant player in the silver and precious metals markets. In July 2009, HSBC became the custodian of the SIVR ETF, which meant that it had physical access to and knowledge of the silver held by that trust. Notably, it named JP Morgan as one of the sub-custodians of the SIVR ETF. "As a result of their participation in the silver ETFs, JP Morgan and HSBC had a direct opportunity to confer and discuss with each other the prices of silver held by each of them. "In addition, Defendants had a strong incentive to suppress downward the price of silver as measured by the NYSE-Arca and CME/COMEX instruments. For example, Defendants could pledge their silver to the ETFs in exchange for ETF shares, sell their shares to other market participants, drive down the prices of silver through trades on NYSE-Arca and CME/COMEX, buy back their ETF shares from investors at lower prices, and return their (now lower-priced) silver ETF shares in exchange for the silver bars initially pledged against those shares, the real value of which remained the same, and only notionally appears lower because of Defendants' suppression. "With respect to Defendants' conduct on the CME/COMEX platforms, JPMorgan and HSBC's scheme has been corroborated by Andrew Maguire, a 40-year precious metals trading veteran. Mr. Maguire reported his findings to the Commodity Futures Trading Commission (CFTC), which commenced an investigation in 2008. "On October 26, 2010, CFTC Commissioner Bart Chilton stated that there had been 'violations of the Commodity Exchange Act in the silver market' and 'fraudulent efforts to persuade and deviously control' silver prices, and that these efforts 'should be prosecuted.'" The full complaint of the lawsuit has been posted at GATA's Internet site here: http://www.gata.org/files/SilverManipulationLawsuit-NIllinois-12-07-2010… The law firm's press release is appended. CHRIS POWELL, Secretary/Treasurer * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16
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| Strong foreign banks splurged on, profited from Fed's emergency credit Posted: 28 Dec 2010 04:49 AM PST Non-US Banks Gain from Fed Crisis Fund By Robin Harding, Bernard Simon, and Christian Oliver http://www.ft.com/cms/s/0/69728262-11ec-11e0-92d0-00144feabdc0.html#axzz… Some of the world's strongest banks have profited from an emergency credit facility set up by the US Federal Reserve to shore up confidence in the global financial system, according to a Financial Times analysis of data released by the Fed. More than half of lending under the Fed's term auction facility — the largest of its crisis programmes — went to foreign banks. Details of the varied uses to which they put it may add to political criticism of the Fed. The Taf was set up in December 2007 to provide one-month loans to credit-worthy banks as markets dried up for lending longer than overnight. In August 2008 it began offering three-month loans as well. Rabobank of the Netherlands and Toronto-Dominion of Canada, two of the only banks in the world with triple-A credit ratings, used more than $20 billion in cumulative Taf loans. Ed Clark, TD chief executive, said that using Taf was logical even though his bank never had a liquidity problem. "That wasn't how we made a lot of money. But you make a dollar here, you make a dollar there. What's the spread you make on a billion dollars?" he said. In the summer of 2008, TD was borrowing $1 billion from TAF at rates of between 2 and 2.5 per cent. For that borrowing it used the lowest quality — and hence highest yielding — collateral acceptable to the Fed. More than 80 per cent of its collateral had a triple-B credit rating at a time when such bonds yielded about 7 per cent. TD could therefore have made a notional gross spread of about $4 million a month during 2008. Mr Clark said the authorities were encouraging healthy banks to use schemes such as the Taf so as not to stigmatise their weaker counterparts. In January 2008, Ben Bernanke, the Fed chairman, said the Taf appeared to be succeeding because "there appears to have been little if any stigma." "You go through the whole crisis and there were lots of things we did that weren't necessarily economic but were the right thing to do for the system," said Mr Clark. "So I'm not embarrassed by this at all." Rabobank said it used the Taf only "in case the situation on the financial markets would further deteriorate" but it still had $5 billion in outstanding loans as late as January 2010. The Fed declined to comment, but has pointed out that all of its emergency credit was repaid in full with interest, and that its goal was to provide liquidity. Korean banks, including Hana Bank, Korea Development Bank, Industrial Bank of Korea, and Shinhan Bank, were also among the most enthusiastic posters of triple-B collateral to the Taf. One Korean bank official said: "It was the best option we had for raising foreign capital during the financial crisis." Help keep GATA going: GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: http://www.gata.org/node/16
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| GATA's lawsuit for Fed's gold documents slogs on Posted: 28 Dec 2010 04:49 AM PST 3:37p ET Monday, December 27, 2010 Dear Friend of GATA and Gold: GATA's lawsuit against the Federal Reserve in U.S. District Court for the District of Columbia slogs on amid the Fed's desperate obstructionism. Last week, through its lawyers, William J. Olson and Jon S. Miles of the Vienna, Virginia, firm of William J. Olson P.C. (http://www.lawandfreedom.com/), GATA filed a long brief replying to the Fed's objection to a couple of GATA's requests. We have asked the court to review privately the gold-related documents the Fed doesn't want to disclose and to permit GATA to pose a limited number of questions to the Fed. Our lawyers' mastery of freedom-of-information law and precedent is amazing even as their reply brief may make any layman's eyes glaze over after reading just a few of its 25 pages. The brief has been posted at GATA's Internet site so our supporters and gold's friends can see just how much effort is going into the lawsuit: http://www.gata.org/files/GATAReplyVsFed-12-22-2010.pdf If you're inclined to help us carry on the struggle, please visit: CHRIS POWELL, Secretary/Treasurer Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
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| Posted: 28 Dec 2010 04:49 AM PST Trader Mark submits: If you are new to the miracle of silver, the WSJ has a nice piece on one of the hottest commodities of 2010. [Commodity-palooza - Year to Date Returns in the Commodity Complex] Silver has a combo bet going on – it is part precious metal, and so is an alternative currency like gold (a place for people to flee the antics of central bankers and their effects on fiat money), and part industrial metal, so it benefits from good vibes from the global economy ala copper. And like many commodities, it has been 'financialized' over the past decade; therefore, large swathes of money to move much more easily in (and out) of it. Therefore, true physical supply and demand apparently means very little -see oil for much of mid 2009+ and almost all of 2010. When the hot money starts to abandon ship, I expect a very ugly ending here… but it could be years away.
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| How to Get an 83% Discount on a Rare Silver Coin Posted: 28 Dec 2010 04:43 AM PST By Tom Dyson, publisher, Common Sense Investing Tuesday, December 28, 2010 Van Simmons started collecting rare coins when he was 12 years old… Back then, coin collecting was a tough business. You had to be an expert, or you'd get ripped off. The old coin market was a bit like the diamond industry is today. To value a diamond, you have to be an expert with a magnifying glass. You have to know about flaws and colors and cuts and clarity. Then you have to know everything there is to know about history and prices. Only then do you have any idea what a stone is worth. The rare-coin market used to be the same way. You needed a magnifying glass and 30 years experience to judge the value of a coin. Professionals had a large advantage over nonprofessionals. Mainstream investors stayed away from the rare-coin market. They thought the market was a fraud. Then Van Simmons came along. In 1986, Van co-founded a business called PCGS or the Professional Coin Grading Service. T...
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| Inflation Heard Round the World... UFOs and NASA: The Meme Goes On Posted: 28 Dec 2010 04:34 AM PST Inflation Heard Round the World Tuesday, December 28, 2010 – by Staff Report Rising commodity prices threaten global economy ... Australians naturally regard high commodity prices as good, but they are now reaching levels that pose a threat to the world economy ... A range of forces operates on commodity markets. The weather in Europe, the continuing strength of the emerging economies and, for some of Australia's commodities, the recent floods all play a role. A common factor is the rise of financial investment, which has surpassed the levels of 2008. In part, there is a simple recognition by investors of the China story, with commodities providing a good way to obtain leverage. But there is also a flight from currencies, which has seen gold double since late 2008 with a 20 per cent rise this year. Many investors seek alternatives to the euro and the US dollar. – The Australian Dominant Social Theme: Prices are up. A little inflation is a go...
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| Gold stays up after Case-Shiller Posted: 28 Dec 2010 04:24 AM PST December 28, 2010 (MarketWatch) — Gold futures stayed near the highs of the session on Tuesday as the dollar remained under pressure after Case-Shiller's index of U.S. home prices fell in October more than analysts had predicted. [source] Case Shiller housing report stokes fears of double-dip recession "The double-dip is almost here, as six cities set new lows for the period since the 2006 peaks," David M. Blitzer, chairman of the Index Committee at Standard & Poor's, said in a statement. "There is no good news in October's report. Home prices across the country continue to fall." The S&P/Case Shiller Home Price Indices is considered the one of nation's leading barometers of the housing market. Not one of the cities in the index saw an increase in home prices in October. According to the index, home prices across the U.S. are now back to where they were in mid-2003, before the housing boom caused prices to jump nearly 30 percent during the height of the market. [source] See also our still-relevant Stein…
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| Weathering the Storm With a Diversified Portfolio Posted: 28 Dec 2010 04:09 AM PST
Sara's examples and analogies were aimed at not only protecting you from disaster by spreading your risk around, but also illustrating the importance of a "contingency and recovery plan."
Sara's survival guide through diversification reminds us that it's not a bad idea to buy some protection, either in the form of stock or assets in another sector, put options on your stocks or even an insurance policy itself! We can never forget that there is "no such thing as a free lunch" and that anything can happen in life, nature and the markets... Always be prepared. It's been a grueling few days. Last Wednesday, Sandy Franks and I had our book-launch party for Barbarians of Wealth: Protecting Yourself from Today's Financial Attilas. Then on Thursday, the Taipan Think Tank convened in Mount Vernon to discuss how better to equip you, our loyal subscribers, with the best investment ideas out there while debunking the conventional wisdom of Wall Street. And on Saturday, I flew home... just in time for a Midwestern blizzard. I got back into Milwaukee by 2:30 p.m., and by the time I got home, it was snowing pretty heavily. In all, we got some 10 inches or so. It was kind of hard to tell with all the wind blowing deep snowdrifts about the farm. Now, I'll admit, I didn't have it as bad as some: there were folks stranded in their cars for 12 hours in Indiana. But things were getting a bit dire. Stop Buying Physical Gold! In 2012, you could see your ability to freely and quietly buy physical gold severely limited. If you buy this one "safe" investment, you could make as much as 12 times more than physical gold. Learn more about this gold investment. At about 4 a.m. Central time, the power went out. Now, we're not just talking about lights and the all-important coffee maker. We're talking heat and well pump, too. We have a wood boiler as a main source of heat. It heats a closed circuit of water from a tank surrounding the boiler, with lines running to and from the house. It's an amazing piece of machinery that will really save us money over the winter season. It's extremely reliable, and fairly straightforward to use. But a power outage affects the boiler when the boiler needs to take in air to keep the wood burning at a hot enough temperature. The water lines run to an air exchange that forces the heated air through the home... And that is powered by electricity. As is our well pump. We were without heat and water for 30 hours... and woke up to some slightly frozen pipes in one of the bathrooms. No surprise, really: the temperature was nine degrees at seven in the morning -- only slightly warmer than the two-degrees reading we got outside the neighborhood bar that night after a well-earned beer (or three). (And we were nearly to the point of packing up our pack of dogs, my lone cat and our handful of birds and heading over to our friend's house, who escaped the storm with power.) The point is, there are some things that seem iron-clad... A sure thing. That is, until they aren't. The same goes for investing. (By the way, investing doesn't have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the market with our easy-to-understand articles.) The Importance of a Diversified PortfolioAt the neighborhood bar, the same question always comes up: "What do you do for a living?" And after I describe my job, folks normally tell me about what they're doing in the investment world. A new friend I'll call Bob says he started investing with a group that promised at least 8% returns every year. So far, they've delivered, and Bob's been reinvesting his returns. Not a bad deal, eh? So, I asked him, "What else are you investing in?" Astutely, he replied, "Oh, I've got a lot of other things I'm into." Good for Bob. Over the years, the idea of diversification has meant settling -- settling for fewer gains. This fact has never really been disputed. In times when the economy was booming, a diversified portfolio meant you were leaving gains on the table in favor of a safer horizon. Now it means the preservation of wealth. Imagine standing on an iced-over lake, apropos for the blizzard we've just been through here in Wisconsin. Now imagine a crack starts just under your feet. If you're standing in one spot, you're putting all your weight on that crack, and you're in for a frigid dip. But if you lie flat on the ice and distribute your weight over a broader area, you might just keep from falling in. Millions of Americans are suffering financial pain... but you don't have to be one of them! Turning hardship into wealth is not only possible, it is actually quite likely when you know just what to do. Discover the secrets that could take you from wherever you are right now to a seven-figure personal fortune. Follow this link immediately to make sure you don't miss a thing... As another friend at the bar said, "Eggs in the same basket will all break." The power came back on at 9:30 a.m. Central time on Monday. We lost three fighting fish -- cold-bloods who couldn't live through the freezing night -- while the rest of us snuggled deep in our sleeping bags in front of a meager fire in the living-room hearth. The rest of us weathered the night chilled and sleepless, but the heat is back on, and we are warm again. The markets will be, too, eventually. The hot streak we've seen recently hasn't really been backed up by economic growth, and until it is, this idea of diversification -- of settling -- needs to be respected a bit more. Think of the definition of "settle." Merriam-Webster's first definition is "to place so as to stay." When you apply that definition to your retirement nest egg, your hard-earned portfolio, suddenly "settling" doesn't sound so bad, does it? Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com. {jtagstpg} {authorstpg} Other Related Sources:
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| Posted: 28 Dec 2010 03:40 AM PST Gold Regains $1400 Gold firmed overseas as the dollar came under renewed selling pressure, reaching a record low against the Swiss franc and nearing 6-week lows against the yen. Volume in the FX markets remains very low this week and moves in the currencies have been primarily order driven, but this renewed dollar weakness is significant nonetheless. As currencies like the dollar and euro suffer ongoing crisis of confidence, alternatives like the Swiss franc and of course gold and silver are benefitting. Even the yen has gotten a boost, perhaps because it at least offers a sense of stability. After the last two decades the Japanese are well versed at propping up a foundering economy. While Japan reported some positive economic data for Nov today — upticks in retail sales, industrial production and steady unemployment — they also notched their 21st consecutive month of negative core CPI. However, with deflation a persistent problem and its largest trading partner — China — tightening, concerns are mounting that Japan will have to expand its quantitative measures, and that does not bode well for the yen longer-term. PBoC adviser Li Daokui said that China will tighten policy gradually, in a manner "acceptable to the market." That's just the latest hint that China is likely on a tightening path for some time to come and it weighed on Asia stocks again today. Flows out of shares are frequently beneficial to alternative assets like gold as well. Encouraging reports about this year's Christmas shopping season in the US had economists leaning toward another uptick in consumer confidence for Dec. They were disappointed. Confidence fell to 52.5, well below market expectations, versus 54.3 in Nov. The S&P/Case-Shiller home price index was also a miss, with the 20-cities index falling 1.3% in Oct (NSA), the fourth consecutive monthly decline. With the housing market in decline once again — following the expiration of all the tax incentives, and rising mortgage rates — worries about a double dip in the residential market are on the rise. Zillow reported earlier in the month that they expected $1.7 trillion in home valuation to evaporate this year, a 63% increase over the dismal market in 2009. The Case-Shiller data adds credence to their forecast. The negative wealth affect associated with more homeowners feeling poorer, the likely impact on their spending habits, the likely increase in foreclosures and strategic defaults which will add to the already oppressive inventory overhang, sets the stage for a grim 2011 for housing. That in turn is a set of cement shoes for the broader US economy.
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| Gold hits two-week high over $1400 as USD sinks Posted: 28 Dec 2010 03:35 AM PST Dec. 28, 2010 (Reuters) — Gold prices jumped nearly 1.5% on Tuesday, topping $1400 an ounce for the first time in two weeks as the dollar sank and dealers anticipated an unprecedented eleventh annual rise next year. After several weeks of trendless trade, gold staged its biggest one-day gain since Dec. 3 as many investors bet that economic uncertainty and currency diversity would fuel more demand from investors and banks. Prices are on track to rise 28% this year, a record 10th consecutive annual gain. "The end of the year loss of confidence in the dollar value has brought gold players back into the market on the long side. It's hard to say more than that," said George Nickas, a gold broker at FC Stone in New York. … Trading volume picked up from Monday's lackluster activity, with over 55000 lots already traded, nearly one-third of this year's average. But activity was still subdued by the UK holiday and lack of official gold fixings. [source]
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| Gold Tertiary Trend Headed Higher as Gold Consolidates at Higher Levels Posted: 28 Dec 2010 03:17 AM PST I have been watching recent developments around the world with considerable interest. There are renewed riots in Greece, new demonstrations in Italy, a growing divide between citizens and government in Ireland while tensions in Spain and Portugal increase daily. Also there are new developments in Belgium, Hungary and Poland as the debt disease spreads its own deadly version of the famous “green shuts” that have yet to materialize in the United States.
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| Mike Ruppert: We Are Weeks Away From Collapse Posted: 28 Dec 2010 03:13 AM PST Home Prices' Downward Spiral Continues Number Of Uninsured Americans Soars To Over 50 Million
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| Posted: 28 Dec 2010 03:00 AM PST Well, not really. But, the Nobel Prize winning uber-Keynesian economist who regularly extols the virtues of deficit spending at the New York Times does make some very good points about why hyper-inflation has not yet occurred in this item today, points that clearly are not understood by inflation alarmists whose ranks include a good number of elected officials. The entire post is included below because it is one that will be worth looking back upon in another year or two, perhaps around the middle of the decade (though recent developments would suggest sooner rather than later), to see how much the Federal Reserve bank balance sheet hole-filling morphs into significantly higher levels of money supply and inflation. Now, keep in mind that, since the Labor Department has been neutering the consumer price index through various measures in recent decades, hyper-inflation is a virtual impossibility, but, the bad news for consumers is that 10 or 20 percent annual inflation as reported in the CPI will feel like hyper-inflation to most people. Anyway, here's why we're not yet Wiemar:
For those who shouted loudly about the astonishing rise in the monetary base two years ago and then expected hyper-inflation to arrive in the U.S. sometime in early-2009, it has been a disappointing time, though buying gold back in 2008 when it could be had at about half of today's price would still have been a wise investment decision. As for the future, it remains to be seen how much those red and green curves begin to rise, but one thing seems certain – gold still looks quite good as something to hold in one's investment portfolio, if for no other reason than that the Federal Reserve seems determined to re-inflate the U.S. economy (regardless of the consequences) and they have a terrible track record at withdrawing stimulus, lest the recovery falter.
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| Gold & Uranium, Rules Of The Range Posted: 28 Dec 2010 02:58 AM PST Golden Crystal. Whether you buy breakouts (difficult) or price weakness (best), it is important to keep your charts simple and clear. Here's the Gold Bullion Chart at around 3am this morning. Notice the focus on the "here and now", which is the $1370 to $1390 price range. The actual range is more like 1372 to 1392, but it is important to always focus on your failure to analyse, rather than your ability to analyse.
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| Gold surging to $1400 on strong Asian buying Posted: 28 Dec 2010 02:55 AM PST Tuesday, December 28, 2010 (IBTimes) — Spot gold prices surged up on Tuesday as it was supported by a weaker dollar and strong buying interest in Asia… Spot gold gained gained nearly one percent to $1,402.40 an ounce by 1352 GMT, jumping over $18. The euro rose sharply as bears were forced to abandon their bets on Tuesday while the dollar came under broad selling pressure… "Gold is riding high on its own, but with the euro/dollar bid, it's even better," said a Singapore-based trader. "Asians have been non-stop buyers, and want to load up when gold is some 40 bucks off the all-time highs." Traders and analysts expected the rally in gold prices to continue in 2011, after the bullion gained 27 percent this year, on course for its strongest year since 2007. "In the last week of the year we'll likely see gold range-bound between $1,375 and $1,400. Next year, we could see the gold rally continue, supported by factors such as the sovereign debt crisis in the euro zone," said Ong Yi Ling, an analyst at Phillip Futures. Ong expected gold prices to rise to $1,550 or $1,600 in 2011. [source]
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Gold prices jumped back above $1400 an ounce, holding onto strong early gains even as the dollar fought back to trim early losses. Today's gains may have been driven by pent-up demand, as Wall Street got back to business after crippling snow storms extended the Christmas break for many employees on Monday. With investors favoring gold over the dollar and euro as a safe haven asset, analysts are predicting gold prices will hit new record highs in 2011…
We received the following description of economic activity, on yellowed paper, framed, as a gift this Christmas:
You may recall last Wednesday we noticed supply managers around the country were betting big on holiday cheer this year. The bet appears to have been a good one:
"[The] last-minute holiday spending lift was aided by consumers," says Michael Niemira, chief economist for the International Council of Shopping Centers, "who had more money as a result of the improving economy, more time as a result of the Friday holiday and more holiday season excitement than in many years."
Indeed, the "improving economy" and "freed-up savings" appear to be at the epicenter of improving retail numbers thus far into the spending season, Category 2 meteorological bombs in the Northeast notwithstanding: 
Allow us a momentary speculation, our first for the 2011 forecast season.
On April 9, we suggested one reason consumer spending seemed fairly robust in 2010 was the fact banks refused to foreclose on millions of defaulted mortgages, lest they write down the value of the homes and take a hit to the balance sheet. 
Indeed, if consumers are truly chirpy about the holidays, why did the Conference Board's consumer confidence index just clock in at 52.5, instead of the Street's guess of 56.9? 
The latest Case-Shiller Home Price Index is down -- and a lot more than the Street expected. The October figure is down 0.8% year over year -- the biggest drop in 10 months, and just a wee bit off "expert" expectations of a 0.2% fall.
On Christmas Day, China took another baby step to fight inflation -- raising interest rates for the second time in just over two months. More are probably in store for 2011.
Oil prices aren't doing their usual dive in reaction to the Chinese news, either. Crude remains above the $90 level it was just before Christmas, presently at $91.28.
China is cutting its export quotas of rare earth elements… again. The Ministry of Commerce just issued its first allotment for 2011 -- 14,446 metric tons of rare earth exports split among 31 companies. 
If year-end tax selling is supposed to beat down gold, it's not happening today. Even as the dollar holds steady, gold is up $20 and is back to $1,405. 
The International Monetary Fund (IMF) has finished selling the 403.3 metric tons of gold it began unloading in September of last year. India snapped up half of it shortly afterward. 
From the "housing is tough all over" file, we see the late socialite Brooke Astor's Park Avenue duplex in New York is under contract for less than half the original asking price.
"That 'Capital Goes Where It Is Treated Best' is nominally true," writes a reader with a tweak of 
"Seems to me you are looking for the best money/investment TRAIL," writes another cleverly, "where the components of the TRAIL are...
"Invest Anywhere but the U.S. and Europe if You Don't Want to Lose Your Freaking Money People! This Is About Wealth Accumulation, Not Patriotism! Capital Goes Where It's Treated Best. Yours Should Too!" suggests a verbose third.
Rising commodity prices, particularly for oil, are among the factors driving the loonie higher, as is a weak U.S. dollar.
These are fun trades, we find them all the time and you don’t need to put a lot into them to make a lot. They are especially useful when you have cash on the side (like we do because we think this house of cards is going down and we will be happy to deploy our cash in the wreckage, a la Buffett) and margin is not an issue and, as you can see, you don’t have to ride them out to the end to have a very good short-term trade while you wait for a little market clarity. 
House price data, 2nd Quarter 2010
Director of the United States Mint Edmund C. Moy announced today that 
Steve Roach on the FUN auction: For the past few years, arguably 
Editor's Note: During this holiday season, when spirits are often high and we are making up our new year's resolutions, our positive thoughts may lead us away from addressing the potential for disaster. If you read carefully over Sara's article, titled " Weathering the Storm With a Diversified Portfolio," which was written not too long ago, you'll be reminded of not only the importance of diversity, but also the preparation for a potential catastrophe.
There's an observation I've tried to make in a number of columns and blog posts, but maybe haven't gotten across as clearly as I should: namely, the extent to which current economic discourse is being warped by what we might call the Weimar Temptation, the desire to see everything in terms of the evils of deficits and the money printed to cover them.
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